[programminggeek]

So, $250M actually falls short of the $292M they are burning through every year. The net loss of $168M a year means the $250M buys them almost 18 months of runway.

Their growth looks less impressive when you consider they spent $292M to only grow revenue $65M.

In short, they are spending $5 to make $1. It's possible the customer LTV is actually $6 over a period of years, but they might not be able to borrow enough to make it back in time.

Am I the only one that thinks that a company turning a profit is not like flipping a light switch? If you have a culture of overspending, you aren't going to wake up money and start running a tight ship.

[john_b]

My understanding of Box is that they focus on enterprise customers more heavily than their competitors. Given upgrade cycles in many large companies, a LTV > $5 is possible.

The difficulty and expense of selling a new product to large companies might also explain the marketing budget.

[erichurkman]

But how long will it take to get a LTV that is going that high, meanwhile cloud storage costs across the board have a downward price tendency?

Or, could Box raise prices significantly enough on some customers to lessen their losses without sending too many customers to competitors?

[trhway]

sounds like very tough situation, worst of both worlds - enterprise sales of a product where competition is on price. Such business have no chances i think until it has a "self-service", read dirt cheap, sales process.

[iambateman]

Could this reflect pressure from investors for a payday? If they feel this is a moment the market believes the business still has "opportunity" even if they don't expect to see it, so they want the liquidity event.

Completely agree about the unflippable profitability switch. Profitability is a direction, not a destination.

[digz]

Of course. The signal here is that investors want to cash out. Even if investors aren't selling shares as part of the offering (haven't read the details yet, so not sure one way or another) and Box is simply issuing new shares and locking up investors for some period of time, this is a path to liquidity for investors.

Generally, selling shares is a signal that insiders view the company as overvalued.. otherwise they would hold. If they needed cash, they would issue debt instruments.

The market is hot on tech, so get out while the getting is good.

[crag]

It doesn't matter. The street will eat it up. Wall Street is begging tech to produce - even if that means no profit. They will line up to invest. Also, (and probably) because Box is a potential buy-out. Which is probably why they are doing an IPO in the first place.

Look.. look at Amazon. That company has never posted a profit. And yet every trader I know is falling over themselves throwing money at them. It's the belief in investing in something"sexy", and "new".

[ryana]

"Look.. look at Amazon. That company has never posted a profit. And yet every trader I know is falling over themselves throwing money at them. It's the belief in investing in something"sexy", and "new"."

This is a) a lazy narrative that simplifies the realities of Amazon's business models and b) flat out false.

The last 4 years Amazon has posted EBITDA of $1.497B, $934M, $544M and $506M (2010-2013, respectively). (1)

Over that same time period they've had Net Income of $1.152B, $631M, ($39M), and $274M

So yeah, I'd say unequivocally that $3.481B in EBITDA and $2.018B in Net Income over a four year time span is absolutely "posting a profit."

1) https://www.google.com/finance?q=NASDAQ%3AAMZN&fstype=ii&ei=...

[crag]

Actually I do stand corrected.. cause Amazon DID post a profit, after several quarters of almost no profit or straight-up losses (for the holiday season).

Also this crap about revenue before taxes, interests - etc (your EBITDA) is just that, crap. It's unreliable because a company can decide what is (and what is not) included in the calculation. Of course, this means that a company can change (and many do) this "measure" from reporting period to reporting period. Remember the Dot-Com bust? Companies that had no value, or any chance of value, looked great on paper due to the EBITDA.

EBITDA does not represent a company's cash. More like it's cash flow that it has to service debt (and as I already said, that calculation can be manipulated by the company). It was designed for this purpose in the 80's - the leverage buy-out decade.

// END of rant

EBITDA doesn't measure profit. Or the ability to earn profit. And frankly, it's a cop-out to state to prove a company's value.

[vikp]

Amazon had a crazy long term focus: http://www.fool.com/investing/general/2013/11/04/why-amazon-... . Their lack of a profit seems to be intentional, in that Jeff Bezos is willing to sacrifice short-term profit for a long-term vision. So the traders are actually making a rational choice here.

[batiudrami]

Plus it's a really weird comparison. One of the oldest, and by far the most successful online marketplaces with long term vision vs. a cloud storage startup who is competing against some major players (Google, Dropbox) and is burning through money. I'm unsure of Box too, I just don't see how Amazon is a reasonable comparison.

[crag]

I didn't mean to compare Amazon to Box. I mentioned Amazon to point out another tech company that is a darling of Wall Street - despite unprofitability (generally).

[harvestmoon]

Did you know that many extremely popular movies did not technically make any profit?

[namenotrequired]

That's also because they mark as much of it as possible as "expense", so that they have to pay as little as possible to those who were promised a percentage of profit.

[jaequery]

anyone know if i can short this stock? i know where this ones heading ...