![]() Meanwhile, Box's stock has been on a tear over the past few weeks, especially after famous tech investor Chamath Palihapitiya gave a bullish presentation on the company at the Sohn Investment conference and the company has raised guidance. On the other hand, the 500 million users may be the key to unlocking growth within enterprises that enterprise sales teams couldn’t effectively crack. As they are forced to expand their market, we believe they will face stiff competition that will make it more difficult to grow. However, we haven’t seen evidence of Dropbox’s ability to effectively build differentiated enterprise products. The main advantage Dropbox would need is the ability to provide differentiated services to enterprises. All of these companies have the added advantage of pre-existing customer relationships. All of the major technology names are active in this field as well, including Amazon, Google, Microsoft, and Apple. The cloud storage and file hosting industry, including all the related services, doesn’t seem to be protected by a particularly wide moat. They built a strong consumer brand in the process but ultimately decided to double down on enterprise. Box decided long ago to pivot to the enterprise, while Dropbox went through numerous failed acquisitions and internal initiatives, attempting to build products in everything from email to payments. Their strategy for years has been to go after the consumer cloud storage market, which never made sense, as that market is highly competitive and has limited revenue potential. This story hides some major issues with Dropbox. Atlassian had a magic number of 1.68 in the most recent fiscal quarter.ĭropbox’s IPO marketing materials make it clear that they want to be seen as the Atlassian of cloud storage, with many discussions of the benefits of the self-serve model, 500 million users, and individual accounts being upsold into enterprises. We believe this is primarily due to its efficient, self-serve, marketing-driven growth model and ability to upsell existing customers a broad suite of offerings. Atlassian’s success has earned it by far the highest revenue multiple in its peer group at 16.9x 2018 sales. Since then, the stock has been on a tear, almost doubling with quarter after quarter of revenue beats. We first wrote about Atlassian right after the IPO two years ago in: No “High” in $TEAM: Why Atlassian Will 10X Or Get Acquired. We believe the secret lies in the Atlassian story. But it doesn’t explain why Dropbox is priced at a premium to SaaS peers despite lower than average growth and margins. This clues us in to why Box has such an abysmally low multiple for a SaaS company. Using the same process as we did for Dropbox above, we found that Box had a magic number of 0.38 in the most recent quarter, and 0.31 is the prior two quarters. As a rule of thumb, a SaaS magic number above 1 is good, and a number below.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |