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Box Sets January 22 Target for $187 Million IPO

The pitch to investors — on hold since the initial filing last March — has begun.

Asa Mathat

Cloud storage and collaboration company Box took another big step on the path to its initial public offering, saying in an amended regulatory filing that it plans to sell 12.5 million shares at a price as high as $13 in a bid to raise as much as $187 million.

The range would give Box a valuation of about $1.5 billion, down from an implied valuation of $2.4 billion when it last raised money from private investors TPG and Coatue Management in July.

Box has also started making its official pitch to investors. Its prospectus appeared this morning on the website Retail Roadshow, including a 32-minute video presentation by CEO Aaron Levie. The offering is expected to price on Jan. 22 and will trade on the New York Stock Exchange under the ticker symbol BOX.

Box’s IPO plans had been in a holding pattern following its initial filing last March. Shortly after, the valuations of several publicly traded cloud software companies declined, prompting Box to wait for more favorable market conditions.

Levie just tweeted a not-so-veiled reference to the delay:

https://twitter.com/levie/status/553588435832029186

Most of the numbers in the filing remained unchanged from the one released in December. The company is on a run rate to $225 million in annual revenue, and for the nine months ended Oct. 31 had posted nearly $154 million in revenue, up 80 percent from the year-ago period. The filing shows that Box had 44,000 companies paying to use its service, though if you listen carefully to Levie’s comments on the video you’ll hear him raise that number slightly to 45,000.

One metric I’ll call out only because it’s new to me: Customer retention. Once a company starts paying for Box’s services, it tends to add more users to upgrade to higher levels of features over time. Levie has occasionally referred to this strategy as “land and expand.”

Box calls out its customer retention rate at 130 percent, which sounds a little weird, but in English it comes down to this: Among its biggest bloc of customers — companies paying at least $5,000 year — most renew their contracts annually at the same level of service they had before. Some — about a third — opt to pay more in their second or third year because they’ve added more features and users, while about five percent don’t renew at all. It’s an odd metric but an important one which Box should probably revisit and rename once the offering is done.

This article originally appeared on Recode.net.