Box’s buzz is long gone but stock is trading near record

Box CEO Aaron Levie speaks at BoxWorks 2018


In this weekly series, CNBC takes a look at the companies that made the first Disruptor 50 list, 10 years later.

At 37, Aaron Levie has been doing the same job for nearly half his life. He’s the CEO of a collaborative software provider Boxesa business he started as a sophomore at the University of Southern California.

A far cry from its fledgling dorm room start-up days, Box now employs more than 2,100 employees and generates nearly $900 million in revenue. annual revenue. Levie, despite his young age, is a veteran of cloud software, an industry that includes Sales force and a few other things at the time Box was starting.

Levie is also a seasoned vet when it comes to Wall Street drama, and he has the scars to prove it.

In the decade since Box worked for CNBC’s list of the first 50 Disruptorsthe company has taken into account a IPO delayed to co-ordinate its economics, a series of stocks underperformed and last year had to manage through fiery battle with active investor Starboard Value, is require company either find a buyer or remove its chief executive officer.

Levie kept her job, and a final standalone Box was win in its proxy war with Starboard. In the end, investors seem to like what they see.

The company recently surpassed an all-time high share price since 2018, and Box has become a safe haven during the active tech market period starting in 2022. Out of 76 companies In the Bessemer Venture Partners Cloud Index, Box is the fourth-best performer and one of only seven members so far this year.

“It’s a strange claim to fame,” Levie said in a recent interview. “I’ve actually come to the other side of this, which is that having a healthy balance between growth and profitability is actually a really good thing.”

Box’s performance this year


Box stock was up more than 5% this year through the end of Wednesday, while Nasdaq was down more than 11% in that time period. Stocks rallied on March 17, after Box’s release forecast at the date of its analysis called for fiscal 2025 revenue growth of 15% to 17%, along with operating margins of 25% to 28%.

Analysts at JMP said in a report that the updated guidance “reflects the company’s strong performance, leadership ability in a broad market and prospects for continued financial improvement. “

Even with the recent momentum, this is not where Levie thought he was going, given the hype surrounding his company 10 years ago, when it was a startup. in Silicon Valley. Its market capitalization today is just $4 billion, up from about $1.7 billion at the time of its 2015 IPO. Venture capitalists valued the company at $2 billion in 2013, year Magazine Inc. put Levie on the cover is Entrepreneur of the Year.

Compare that to some of the top names that joined Box on the first Disruptor 50 list. Airbnb worth $106 billion, Shopify at $83 billion, Square (now Block) at $75 billion, and Atlassian at $73 billion. In that year’s list, there was also a rival Box Dropboxhas struggled since its IPO in 2018 and now has a market capitalization of less than $9 billion.

“On the surface, we believe we are undervalued,” Levie said. To prove it, the company bought back the stock and on the day of its analysis, increased its buyback plan by 150 million dollars in the next year.

Box co-owners Aaron Levie (C) and Dylan Smith (2nd R) celebrate their company’s IPO on the floor of the New York Stock Exchange, January 23, 2015.

Brendan McDermid | Reuters

“That’s our message,” Levie said. “We think the stock is very attractive for us to own” and “we have substantial future returns.”

Some of that potential profit comes from revenue growth, which is finally accelerating. Revenue for the financial year ending January was up 13%, up from 11% the year before. Before that, growth had slowed for eight consecutive years, as improved collaboration and file storage tools were being introduced into low-cost productivity suites from Google and Microsoft.

To achieve 17% growth in three years, Box is counting on a strategic shift in regards to offering more of its customers.

When Microsoft is a punching bag

In the years that followed, Box invested heavily in moving from product to platform. Instead of selling collaboration software, they now offer a so-called content cloud – a full suite of services for document storage and sharing, workflow management, file security, and integrations. third-party tools. In early 2021, Box spends $55 million to start a business SignRequestadd its cloud digital signature technology.

“A decade ago, all we talked about was collaboration,” says Levie. Now, he said, the company is “building a complete suite rather than a single capacity that is driving the whole growth.”

Of its more than 100,000 customers, Box says 120 are spending at least $1 million a year. In its customer base, the company sees “a 7-fold opportunity to expand users” as its products become relevant to more people in the workplace, according to the company’s presentation of the day. analysis.

In the software-as-a-service, or SaaS, world, investors have heard plenty of companies pitching a “land and expansion” model, selling to a small group of developers or developers. marketing and then use that footprint to gain wider acceptance within an organization.

Box has made it work in collaboration, but there is a long way to go to prove that its platform can be a vital part of the enterprise system of the future. While the stock outperformed year-end, it still traded on about four times more revenue than expected, putting it in the final fifth of the year. Cloud Index BVP.

The good news for Levie is that activists aren’t on his side, and the metrics are improving where it matters most: free cash flow is up 41% in 2022 to $170.2 million.

“I would tell all founders to focus more on cash flow,” Levie said.

With two young children at home, Levie doesn’t have much time left to coach young entrepreneurs who are trying to navigate the current market. But he’s learned a few things through the kinds of battles that many tech entrepreneurs have so far avoided.

And if he has any sage advice, it is:

“Silicon Valley has big and small flows,” says Levie. Always look at long-term economics and “how you’re going to generate cash flow in the future,” he adds, “because that future can come faster than you think.”

Registration for our original, weekly newsletter, which goes beyond the annual Disruptor 50 list, providing an in-depth look at companies like Box before they go public and founders like Levie, who continue to innovate in all areas of the economy.

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