So far so good for Box

Box shares close at $23.23 on its IPO day, up 66 percent

Box’s first appearance on Wall Street as a public company went off to a good start. The Los Altos company’s shares are priced at $21.79 as of 7:18 AM PST, which is up from yesterday’s set price of $14 a share. At closing time, Box’s shares ended up at $23.23, which is a 66 percent boost from the $14 share price. The company ended up raising $175 million on Friday through the IPO.

Box’s IPO is being closely watched by industry observers since the cloud storage and workplace collaboration startup first detailed its IPO plans back in March. With Box’s current share price hovering in the $20 range, it’s now valued over $2 billion, which puts it back in line with the $2.4 billion valuation the company received when it took in a $150 million funding round from TPG Capital and Coatue Management.

I’ll be following the day’s developments here in this post:

7:30 a.m. PST – Here’s a chart that gives a rundown of Box’s first minutes since going public.
generate_fund_chart

7:48 a.m. – Here’s a statement from Box CEO Aaron Levie on the IPO that we received:

[blockquote person=”Aaron Levie” attribution=”Aaron Levie”]We’re in the midst of a profound technology shift, as businesses of all sizes move their critical information and processes to the cloud. It’s an incredible time to be building an enterprise software company, and we couldn’t be more excited about Box’s future. [/blockquote]

Here’s Apple’s Tim Cook sending over good vibes to Box.

And if you were curious as to what type of socks Aaron Levie might be wearing on his big day, check them out here as he visited the ever-enthusiastic Jim Cramer:

8:02 a.m. – Box is now trading at about $22.67, off a high of $24.73 so far this morning, but there’s a long way to go.

8:16 a.m. – Well, perhaps Box did undervalue itself before going public, as Gigaom’s Stowe Boyd thought when we last spoke. Stowe and others speculated that Box originally set its share prices well below the $2.4 billion valuation it received in summer in order to underplay itself and “have some headroom.”

A Reuters report currently values the company “at nearly $3 billion.”

CNBC asked Levie about why the company set the price as it did and Levie replied “Our job is to try and get a fair valuation of our company in this process and I think that was the strategy we employed and let the market kind of figure out what the pricing is from there, and I think given the growth of the business I think you’ll see kind of what we’re up to.”

A look at the trading floor as Box opens

A photo posted by NYSE (@the_nyse) on

8:30 a.m. – Levie told CNBC that he thinks Box is misunderstood in that some people believe it is a consumer company and not an enterprise company. He then listed off some of the Box’s clients (of course starting with [company]General Electric[/company]) and reiterated that the company “helps manage corporate information, secure it, and then make it accessible in different devices, allow you to collaborate around it and that’s not really the focus of Google, which is much more consumer oriented.” Hmm, I bet [company]Google[/company] would disagree.

8:44 a.m.
Here’s what Levie told CNBC about Box’s burn rate and how it plans to make a profit:
[blockquote person=”Aaron Levie” attribution=”Aaron Levie”]We run the business far more conservatively from what is assumed because we’re going after such a large market. We care about the individual profitability on a per customer basis and right now we’re in the mode where we are going after this market in a big way with a product that’s very differentiated and I would just say to investors, certainly we would prefer investors that would understand that model, that understand the sort of replatforming of enterprise IT that is playing out.

When you think about the new, next generation IT model for a large organization it’s going to be services like Workday and Salesforce and ServiceNow and these platforms, and we’re trying to take the content management and the storage infrastructure from the on-premise environment and move that to the cloud. And the economics are pretty clear in the S-1 in terms of how we get to profitability in doing so.[/blockquote]

Check out Box’s numbers per its SEC filing and see if you agree with Levie:




8:52 a.m.

9:27 a.m. – And speaking of Dropbox and what the Box IPO could mean for the long-time Box rival, Forrester’s vice president and principal analyst Rob Koplowitz shared his thoughts with me in an email:

[blockquote person=”Rob Koplowitz” attribution=”Rob Koplowitz”]I do see Dropbox and Box on a collision course if Dropbox continues to pursue the enterprise, and I have no reason to doubt that they will. People are saying they don’t compete, and it might look that way today, but in the long run they are just taking different paths to the same goal.
[/blockquote]

Also, Levie just responded to Tim Cook’s tweet. It’s warm and gushy. Investors should be pleased.

9:48 a.m.
Levie spoke to Fox Business and was asked about competition from companies like [company]Amazon[/company] and [company]Citrix[/company] and if “any of these companies keep you up at night?”

Levie replied that since the company was founded, they’ve always been in tough competition and said the following:
[blockquote person=”Aaron Levie” attribution=”Aaron Levie”]We’re talking about essentially, every bit of data in the entire world in enterprises needs to be managed; it needs to be stored, it needs to be secured, people need to access and share that information so there’s going to be a number of companies that want to help organizations do that and so we’ve always had competition in this process.[/blockquote]

Fox Business then asked about Box’s spending habits to which Levie replied:
[blockquote person=”Aaron Levie” attribution=”Aaron Levie”]It’s always a balance, right? We see a once in a lifetime transition from on-premise technology, on-premise computing, where every single year, tens of billions of dollars are spent on a legacy technology architecture and we see that, much of that, transitioning to the cloud. And there’s only going to be a few winners when that happens so we would like to obviously be one of those winners…

…As that technology all transitions to the cloud, we need to be able to help customers and be there as they are making that transition and that takes money and that takes investment and a salesforce and marketing and building out world-class technology and those are the investments that we’ve made.[/blockquote]

There’s those words again: sales and marketing. Box is entering new territory targeting potential customers in sectors that have historically been the realm of the big enterprise vendors companies like Microsoft, IBM and Citrix.

It’s likely that Box is going to be spending more on sales and marketing to compete against the big guys for these bountiful deals, and that’s going to require a team with the necessary skills and knowledge of each industry that Box is targeting — healthcare, legal, financial, etc.

10:00 a.m.

10:08 a.m.

10:31 a.m. — Box now trading at $23.72.

11:15 a.m. — So Box is clearly having a nice day with its shares performing much better than what some folks might have thought leading. However, not everyone is saying “BUY, BUY, BUY!”

Tom Taulli at IPO Playbook is weary of a publicly traded Box and he believes Box’s revenue growth is starting to stall, writing “During the quarter ended Oct. 31, revenues increased by 69% compared to a 98% ramp for the quarter ended Jan. 31.”

Like many others, he also sees intense competition from the big cloud providers and legacy companies and writes that “there are several examples of cloud operators that have been crushed by the competition.”

He then cites Millennial Media, Inc. as an example of a startup that got in over its head in the public marketplace where it had to battle Google and Apple in the mobile app space. He writes that “Since its IPO back in March 2012, Millennial Media has lost 94% of its value.”

Does Box face a similar fate?

And if you want to live vicariously through Levie on what it is like to become a public company, Marketplace Tech was there at the trading floor and captured some sounds. Honestly, I was hoping for a lot more yelling and chaos, like the running of the bulls.

11:38 a.m. — Future frenemies?

12:41 p.m. — Share price is at $23.48.

12:57 p.m.

1:35 p.m. — Final pricing:
generate_fund_chart 4

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This post will be updated throughout the day