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Box Finally Prices Its IPO

Finally a go after a 10-month delay.

Asa Mathat

Box, the cloud-based company that helps businesses share and collaborate on their documents, has priced its initial public offering at $14 a share according to sources close to the process.

At that price, Box’s offering would value the company at about $1.7 billion and raise about $167 million. That represents a drop in its implied valuation from $2.4 billion when it raised $150 million in private investments last year.

Earlier this month, Box said in a regulatory filing that it expects its offering of 12.5 million shares to price between $11 and $13 a share. which could help it raise as much as $187 million It is expected to debut for trading on the New York Stock Exchange Friday morning under the ticker symbol BOX.

The pricing would appear to bring a close to a process that began about 10 months ago, during which the offering was delayed. Box first filed to go public in March. Days later, the share prices of several publicly traded cloud software companies including Salesforce.com, Workday, ServiceNow and others declined, creating market conditions that Box and its bankers viewed as unfavorable.

It opted instead to raise money. In July it took a $150 million investment round led by private equity firm TPG and hedge fund Coatue Management.

Like most cloud software companies, Box loses money, but has been growing its revenue quickly. The company said in a recent filing that it is on a run rate to post $225 million in annual revenue. For the nine months ended Oct. 31, it posted nearly $154 million in sales, an 80 percent increase from the year-ago period.

Box has about 45,000 companies paying to use its service. Its biggest problem has been getting its marketing costs under control. Most of its customers started using its service for free, so Box has absorbed the cost of carrying those customers as a marketing expense, which as of October was north of $55 million.

Ten months ago, Box filings showed that it was spending $1.45 for every dollar it attracted in revenue. But more recently that figure has improved in Box’s favor to 97 cents as more customers convert from free to paid levels of service.

Box’s business is also increasingly competitive. The rival to which it is most often compared is Dropbox, another cloud file-sharing company that started with a consumer-focused business and has made steady progress toward building a service aimed at large companies, and has a massive user base on which to build.

This article originally appeared on Recode.net.

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