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How the Box IPO Might Pay Off for Investors

By Tim Beyers - Mar 28, 2014 at 3:00PM

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A Fool finds positive signs amid the legacy of losses marring the planned Box IPO.

Will the Box IPO succeed? Skeptics rightly tout a long history of losses and strengthening competition from the likes of Google ( GOOGL 0.62% ) and Microsoft ( MSFT 0.01% ), among others. Yet there's hope to be found in the company's latest growth metrics, Fool contributor Tim Beyers says in the following video.

Specifically, revenue is up 5.89 times in the last two fiscal years, from $21.08 million to $124.19 million. Cost of revenue expanded 3.78 times over the same period. Sales and marketing is up 4.73 times; notable when you consider how much grief Box founder Aaron Levie is taking for over-investing in this area. So long as revenue grows faster, Tim says, the pace at which Box invests won't much matter.

Even so, it's worth remembering that, in its S-1 filing with the Securities and Exchange Commission (SEC), Box copped to "significant losses" since opening for business all the way back in 2005. Nine years without a profit, yet now's the right time for a Box IPO. Who wouldn't be skeptical?

In the meantime, Box's emphasis on providing enterprise-scale service on any operating system or device has won the company plenty of large clients -- and more than 200,000 businesses in all. Investing to capture even more of that market makes sense right now, Tim says. Do you agree? Would you invest in the Box IPO? Leave a comment below to let us know what you think.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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