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Box’s buzz has long since passed but the stock is trading near a record while cloud peers suffer



Box CEO Aaron Levie speaking at BoxWorks in 2018


In this weekly series, CNBC takes a look at companies that made the inaugural Disruptor 50 list, 10 years later.

At age 37, Aaron Levie has been at the same job for almost half his life. He’s the CEO of collaboration software vendor Box, a business he started as a sophomore at the University of Southern California.

Far from its days as a fledgling dorm room start-up, Box now employs more than 2,100 people and generates close to $900 million in annual revenue. Levie, despite his relative youth, is a grizzled veteran of cloud software, an industry that consisted of Salesforce and little else at the time Box was getting started.

Levie is also a seasoned vet when it comes to Wall Street drama, and he has the scars to prove it.

In the decade since Box made CNBC’s very first Disruptor 50 list, the company has reckoned with a delayed IPO to rightsize its economics, an extended stretch of stock underperformance and last year had to manage through a heated battle with activist investor Starboard Value, which was demanding the company either find a buyer or oust its CEO.

Levie kept his job, and an independent Box was ultimately victorious in its proxy fight with Starboard. At long last, investors seem to be liking what they see.

The company recently surpassed its all-time high stock price from 2018, and Box has turned out to be a safe haven during the tech market’s nosedive to start 2022. Among the 76 companies in the Bessemer Venture Partners Cloud Index, Box is the fourth-best performer and one of only seven members that’s up so far this year.

“It’s a weird claim to fame,” Levie said in a recent interview. “I’ve literally come around to the other side of this thing, which is having a healthy balance of growth and profit is actually a really good thing.”

Box’s outperformance this year


Box shares have climbed over 5% this year through Wednesday’s close, while the Nasdaq has dropped more than 11% over that stretch. The stock rallied on March 17, after Box issued a forecast at its analyst day that called for fiscal 2025 revenue growth of 15% to 17%, alongside an operating margin of 25% to 28%.

Analysts at JMP said in a report that the updated guidance “reflected the company’s strong execution, leadership in a large market, and prospects for continued financial improvement.”

Even with the recent momentum, this isn’t where Levie thought he would be, given the hype around his company 10 years ago, when it was a scorching Silicon Valley start-up. Its market cap today is just shy of $4 billion, up from about $1.7 billion at the time of its 2015 IPO. Venture investors valued the company at $2 billion in 2013, the year Inc. Magazine put Levie on the cover as its entrepreneur of the year.

Compare that to some of the top names that joined Box on the first Disruptor 50 list. Airbnb is worth $106 billion, Shopify is at $83 billion, Square (now Block) is at $75 billion and Atlassian is worth $73 billion. Also on the list that year was Box rival Dropbox, which has struggled since its 2018 IPO and now has a market cap of under $9 billion.

“Categorically, we believe we’re undervalued,” Levie said. To prove it, the company has been buying back shares and, at its analyst day, increased its repurchase plan by $150 million over the next year.

Box co-counders Aaron Levie (C) and Dylan Smith (2nd R) celebrate their company’s IPO on the floor of the New York Stock Exchange, Jan. 23, 2015.

Brendan McDermid | Reuters

“That’s our message,” said Levie. “We think the shares are very attractive for us to own” and that “we have substantial upside going forward.”

Some of that potential upside comes from revenue growth, which is finally accelerating. Revenue in the fiscal year that ended in January increased 13%, up from 11% the prior year. Before that, growth had slowed for eight consecutive years, as improving collaboration and file storage tools were getting baked into low-cost productivity suites from Google and Microsoft.

To reach growth of 17% in three years, Box is counting on a strategic shift that involves providing more stuff to its customers.

When Microsoft was a punching bag

In Box’s early days, the company played the role of upstart taking a direct shot at Microsoft, which was then an easy target. The software giant had yet to go all in on cloud and its SharePoint product was a clunky collaboration tool that didn’t work across the array of mobile devices consumers were adopting.

Box’s app made it easy for people to store and share documents in the cloud and access them from anywhere. It was fun while the venture capitalists were subsidizing growth. But competition was everywhere, leaving Box with no pricing power.

When Box’s IPO prospectus landed in March 2014, investors saw signs of a flawed business model. Operating costs in the most recent quarter were almost twice as high as revenue. So Box delayed its offering, raised $150 million in private financing, and 10 months later hit the market with its financials pointing in a more sustainable direction.

In subsequent years, Box invested heavily to move from product to platform. Instead of selling collaboration software, it’s now offering what it calls the content cloud — a full suite of services for storing and sharing documents, managing workflow, securing files and integrating third-party tools. In early 2021, Box spent $55 million on start-up SignRequest, adding e-signature technology across its cloud.

“A decade ago all we talked about was collaboration,” Levie said. Now, he said, the company is “building out a complete suite as opposed to one capability that was driving all of the growth.”

Of its 100,000-plus customers, Box says 120 are spending at least $1 million a year. Within its client base, the company sees a “7x user expansion opportunity” as its products become relevant to more people in the workplace, according to to its analyst day presentation.

In the world of software as a service, or SaaS, investors have heard plenty of companies tout the “land and expand” model, selling to a small team of developers or marketers and then using that footprint to get wider adoption inside an organization.

Box made it work with collaboration, but it has a long way to go to prove that its platform can be a key piece in the enterprise stack of the future. While the stock has outperformed of late, it still trades at about four times forward revenue, putting it in the bottom fifth of the BVP cloud Index.

The good news for Levie is that the activists are off his back, and metrics are improving where it matters most: free cash flow jumped 41% in 2022 to to $170.2 million.

“I would tell all founders to get more focused on cash flow,” Levie said.

With two little kids at home, Levie doesn’t have much time anymore to provide coaching to young entrepreneurs who are trying to navigate the current market choppiness. But he has learned some things going through the types of battles that many tech entrepreneurs have thus far avoided.

And if he has any sage advice, it’s this:

“Silicon Valley has ebbs and flows,” Levie said. Always look at long-term economics, and “how you’re going to generate cash flow in the future,” he added, “because that future might come faster than you think.”

Sign up for our weekly, original newsletter that goes beyond the annual Disruptor 50 list, offering a closer look at companies like Box before they go public, and founders like Levie who continue to innovate across every sector of the economy.

Business News

Trump media company subpoenaed in federal criminal probe of SPAC deal



Former U.S. President Donald Trump gives the keynote address at the Faith & Freedom Coalition during their annual “Road To Majority Policy Conference” at the Gaylord Opryland Resort & Convention Center June 17, 2022 in Nashville, Tennessee.

Seth Herald | Getty Images

Donald Trump’s media company was subpoenaed by a federal grand jury in connection with a criminal probe, according to the company with which the former president’s firm plans to merge.

Digital World Acquisition Corp. said in a filing Friday that Trump Media and Technology Group received a subpoena from the grand jury in Manhattan on Thursday. The Trump company also received a subpoena from the Securities and Exchange Commission regarding a civil probe on Monday, DWAC said.

DWAC also said some current and former TMTG employees have also recently received grand jury subpoenas.

The filing came days after DWAC said the government investigations could delay or even prevent its merger with Trump’s newly formed company, which includes Truth Social, a social media app intended to be an alternative to Twitter.

Neither TMTG nor a spokeswoman for Trump immediately responded to CNBC’s requests for comment.

The Justice Department and the SEC, which regulates the stock market, are investigating the deal between DWAC and Trump Media. By merging with DWAC, which is a kind of shell company called a special purpose acquisition company, or SPAC, Trump’s firm would gain access to potentially billions of dollars on public equities markets.

Trump established Truth Social months after Twitter banned him for his tweets on Jan. 6, 2021, when hundreds of his supporters stormed the U.S. Capitol in a bid to overturn Joe Biden’s victory in the presidential election. Trump Media’s CEO is former Rep. Devin Nunes, one of the former president’s most ardent loyalists in the Republican Party. Trump is also considering whether to run for president in the 2024 election.

Trump has continued to spread the lie that the election was stolen from him. His alleged involvement in the Jan. 6 insurrection is being probed by a House select committee that has accused the former president of being at the center of a multipronged conspiracy to block the peaceful transfer of power to Biden.

Early criticism of the Trump-DWAC deal came from Sen. Elizabeth Warren, D-Mass. In calling for an investigation, she wrote to SEC Chair Gary Gensler in November, telling him that DWAC “may have committed securities violations by holding private and undisclosed discussions about the merger as early as May 2021, while omitting this information in [SEC] filing and other public statements.”

DWAC shares are far off their highs, closing Friday at $24.20. The stock had surged above $90 in October, after the deal with Trump’s group was announced.

DWAC on Monday revealed in a securities filing that it learned June 16 that each member of its board of directors received subpoenas from the same federal grand jury.

The grand jury sought documents similar to those the SEC already requested as part of its civil probe, DWAC said. The company itself was served with a subpoena a week ago with similar requests, along with other requests relating to communications, individuals and information involving Rocket One Capital.

DWAC also revealed Monday that a board member, Bruce J. Garelick, had told management that he would quit the board during the previous week. Garelick said his resignation “was not the result of any disagreement with Digital World’s operations, policies or practices,” according to the company filing.

— CNBC’s Kevin Breuninger and Thomas Franck contributed to this story.

This is breaking news. Please check back for updates.

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Walmart is working on a response to the Supreme Court’s abortion decision, CEO says in memo



Walmart CEO Doug McMillon speaks at the CNBC Evolve conference November 19th in Los Angeles.

Jesse Grant | CNBC

Walmart CEO Doug McMillon told employees on Friday that the company is weighing how to respond to a Supreme Court decision that ended the federal right to an abortion.

“We are working thoughtfully and diligently to figure out the best path forward, guided by our desire to support our associates, all of our associates,” he said in a memo sent to employees on Friday. “We will share details on our actions as soon as possible, recognizing that time is of the essence.”

He did not say what changes the company is considering, such as if it may cover travel expenses for workers who must travel to another state where abortion is available.

The memo was previously reported by The Wall Street Journal.

Arkansas, home to Walmart’s headquarters, is one of several states with severe limits or bans on abortions that went into affect after the high court’s ruling.

Walmart is also the country’s largest private employer. It has about 1.6 million employees across the country, including many who live and work in states across the Sunbelt with abortion restrictions such as Texas, Oklahoma and Florida.

Since the Supreme Court reversed Roe v. Wade, companies across the country have had a mix of reactions. Some, including JPMorgan Chase, Dick’s Sporting Goods and Target, have announced new plans to cover employee travel to other states for abortions. Others, such as Kroger and Apple, said they already cover travel for medical treatments and reproductive health care. And still others have remained quiet.

Amazon, the second-largest private employer in the country, said in May that it would pay up to $4,000 in travel expenses each year for non-life-threatening medical treatments, including abortions.

Walmart already covers employee travel for some medical procedures, such as certain heart surgeries, cancer treatments and organ transplants.

Walmart health benefits cover only some abortions. According to the company’s employee handbook, charges for “procedures, services, drugs and supplies related to abortions or termination of pregnancy are not covered, except when the health of the mother would be in danger if the fetus were carried to term, the fetus could not survive the birthing process, or death would be imminent after birth.”

Plan B, an over-the-counter form of contraception, is covered only if the person gets a prescription. The pill, often called the “morning after pill,” works by preventing ovulation or preventing a fertilized egg from attaching to the womb. It can be taken after unprotected sex or when contraception fails.

Other forms of contraception are also covered with a prescription, including birth control pills, injections and intrauterine devices, or IUDs. Some anti-abortion activists also oppose IUDs because they can stop a fertilized egg from implanting in the uterus.

In Friday’s memo, McMillon said Walmart has gathered input from employees as it decides what to do. He also alluded to the size and diversity of both the company and its customer base.

“We know our associates and customers hold a variety of views on the issue, and this is a sensitive topic about which many of us feel strongly,” he said. “We want you to know that we see you, all of you. No matter what your position on this topic is, we want you to feel respected, valued and supported.”

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FCC authorizes SpaceX to provide mobile Starlink internet service to boats, planes and trucks



The Starlink logo is seen in the background of a silhouetted woman holding a mobile phone.

Sopa Images | Lightrocket | Getty Images

The Federal Communications Commission authorized SpaceX to provide Starlink satellite internet to vehicles in motion, a key step for Elon Musk’s company to further expand the service.

“Authorizing a new class of [customer] terminals for SpaceX’s satellite system will expand the range of broadband capabilities to meet the growing user demands that now require connectivity while on the move, whether driving an RV across the country, moving a freighter from Europe to a U.S. port, or while on a domestic or international flight,” FCC international bureau chief Tom Sullivan wrote in the authorization posted Thursday.

SpaceX did not immediately respond to CNBC’s request for comment on the FCC decision.

Starlink is SpaceX’s network of satellites in low Earth orbit, designed to deliver high-speed internet anywhere on the globe. SpaceX has launched about 2,700 satellites to support the global network, with the base price of the service costing users $110 a month. As of May, SpaceX told the FCC that Starlink had more than 400,000 subscribers.

SpaceX has signed early deals with commercial air carriers in preparation for this decision: It has pacts with Hawaiian Airlines and semi-private charter provider JSX to provide Wi-Fi on planes. Up until now SpaceX has been approved to conduct a limited amount of inflight testing, seeing the aviation Wi-Fi market as “ripe for an overhaul.”

The FCC’s authorization also includes connecting to ships and vehicles like semi-trucks and RVs, with SpaceX having last year requested to expand from servicing stationary customers. SpaceX had already deployed a version of its service called “Starlink for RVs,” with an additional “portability” fee. But portability is not the same as mobility, which the FCC’s decision now allows.

The FCC imposed conditions on in-motion Starlink service. SpaceX is required to “accept any interference received from both current and future services authorized,” and further investment in Starlink will “assume the risk that operations may be subject to additional conditions or requirements” from the FCC.

The ruling did not resolve a broader SpaceX regulatory dispute with Dish Network and RS Access, an entity backed by billionaire Michael Dell, over the use of 12-gigahertz band – a range of frequency used for broadband communications. The FCC continues to analyze whether the band can support both ground-based and space-based services, with SpaceX pushing for the regulator to make a ruling.

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