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EMILY COHEN, HARPER GAY, LILLY TAHMASEBI, TAKUYA TAKEDA
COMPANY SNAPSHOT
FOUNDED IN 2005 BY AARON
LEVIE, A STUDENT AT USC
BOX COMPETES IN THE FILE SHARING AND SYNCHRONIZATION
MARKET
BLOOMBERG RANKS BOX THIRD IN THE
MARKET
ON JANUARY 25, 2015 BOX WENT
PUBLIC
$14
IPO INITIAL PRICE
$20.20MARKET OPENING
PRICE
$23.23MARKET CLOSING PRICE
ESTABLISHED A MARKET CAPITALIZATION OF
1.6 BILLION
INDIVIDUAL BUSINESS ENTREPRISE
BOX USES A FREEMIUM BUSINESS MODEL
FREE $10/MO FREE $15/MO VARIES
88% NON-PAYING USERS
AS OF 2015
12% PAYING USERS
61%
3.4 MILLION REGISTERED
USERS60% OF FORBES’
FORTUNE 500 COMPANIES
COMPETITIVE ADVANTAGES
SUPERIOR PRODUCT
PARTNERSHIPS WITH LARGER
INDUSTRY PLAYERS
FINANCIAL DIAGNOSIS
2016 2015 2014 2013
ROE -147.65% -68.07% -279.67% -114.23%
Profit Margin -67.05% -84.08% -136% -191.34%
Asset Turnover 0.61 0.44 0.53 0.30
Financial Leverage 3.61 1.84 3.88 1.99
TIE ratio -103.2 -59.4 -37.4 -43.5
STOCK VALUATION ASSUMPTIONS
FORECASTING & CASH BALANCE
CHANGING SG&A COSTS
REVENUE FORECASTING
CAPITAL ASSET PRICING MODEL
VALUATION PROCESS OVERVIEW
TERMINAL VALUE
EARLY YEARS
FORECAST PERIOD
2004 2016
2016 2026
FORECASTING & CASH BALANCE
NEG CASH FLOW
MIN CASH BALANCE
2016
2026
NEW EXISTINGCHANGING SG&A COSTS
REVENUE FORECASTING
NICHE MARKET
EXPECTED TO GROW TO $3.3
BILLION BY 2020
PREDICT BOX TO
GROW ITS MARKET
SHARE TO 30% BY 2019
COMPANY BETA
RISK FREE RATE +
CAPITAL ASSET PRICING MODEL
xEXPECTED MARKET
RETURN -
RISK FREE RATE
RISK FREE RATE
COMPANY BETA
EXPECTED MARKET RETURN
TAKEN FROM NASDAQ 1.44
= S&P 500 INDEX6.19%
2.15%
US TREASURY BOND
TERMINAL VALUE
( CASH FLOW (t) * (1+g) )
(WACC - G)
WE USED THE PERPETUAL GROWTH TERMINAL VALUE
FORMULA IN OUR ANALYSIS
PERPETUAL GROWTH EQUATION MIGHT PRODUCE LARGER THAN
ACTUAL VALUES *
SCENARIO ANALYSIS
BASELINE SCENARIOOFFSET SG&A BY 11% ANNUALLY
REVENUE 30%
NEGATIVE FREE CASH FLOW UNTIL 2026
STOCK PRICE2016
2026
$15.04
-$3.15
IMPACTS ON FINANCIAL STATEMENTS
BOX’S DEBT TO ASSETS RATIO INCREASES 5
FOLD
SELL
OPTIMISTIC SCENARIOOFFSET SG&A BY 15% ANNUALLY
REVENUE 30%
NEGATIVE FREE CASH FLOW UNTIL 2026
STOCK PRICE2016
2026
$15.04
$47.83
IMPACTS ON FINANCIAL STATEMENTS
PROFITS ARE REALIZED IN 2021, 2 YEARS EARLIER THAN IN BASELINE SCENARIO
BUY
PESSIMISTIC SCENARIOOFFSET SG&A BY 5% ANNUALLY
REVENUE 30%
NEGATIVE FREE CASH FLOW UNTIL 2026
STOCK PRICE2016
2026
$15.04
-$69.83
IMPACTS ON FINANCIAL STATEMENTS
PROFITS ARE NEVER REALIZED
CURRENT RATIO <1 IN 2018 -3 IN 2026
SELL
LOOKING TO THE FUTURE