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Cloud Stocks: Analysis of Box’s Acquisition of SignRequest

Posted on Thursday, Apr 22nd 2021

With the global lockdown conditions continuing, the global content and collaboration services player Box (NYSE: BOX) is delivering strong performance. It recently also announced several product upgrades and acquired a digital signature technology firm to announce its foray into the digital signature market.

Box’s Financials

Box’s fourth-quarter revenues grew 8% to $198.9 million, ahead of the market’s expectations of $196.57 million. On an adjusted basis, EPS was $0.22, ahead of the market’s forecast of an EPS of $0.17.

For the fiscal year, revenues grew 11% to $770.8 million and EPS was $0.70.

Box expects to end the first quarter with revenues of $200-$201 million with a loss per share of $0.06-$0.05. For the current year, Box expects revenues of $840-$848 million with a loss per share of $0.25-$0.20. The market expects revenues of $844.87 million with an EPS of $0.80 for the year and revenues of $200.48 million and an EPS of $0.17 for the first quarter.

Box’s Product Upgrades

Box recently introduced Box Shuttle, an easier, faster, and less costly solution to migrate content, permissions, and metadata to the Box Content Cloud. Box Shuttle will allow customers to get access to content management experts for strategy and execution, change management processes to drive adoption, and technology to accelerate digital transformation. It is now the lowest-cost full-service content migration program in the cloud content management market.

Earlier this year, Box announced a new product offering that will seamlessly integrate Google Workspace. Google Cloud and Box are working together to now provide interoperability between Google Workspace and Box so that users can see seamless collaboration and productivity for thousands across their joint customers. Box for Google Workspace Essentials enables organizations to purchase Google Workspace collaboration and communication solutions to work specifically with Box so that users can access their Google Docs, Sheets, and Slides in Box. Organizations will be able to leverage the benefit of Google’s productivity tools along with Box’s security and compliance capabilities.

Box’s SignRequest Acquisition

Recently, Box announced its acquisition of the Netherlands-based, SignRequest for $55 million. Founded in 2014 by Geert Jan Persoon, Michaël Krens, and Nick Dessens, SignRequest helps customers sign documents on their online platform. Box also previewed its e-signature capability Box Sign, which has been developed on SignRequest’s technology. Box Sign will be included in Box’s business and enterprise plans and is natively embedded in a cloud content management platform. It will allow customers to modernize the way they work by digitizing processes that are important, while also ensuring that their agreements are securely managed and governed in its content cloud.

According to a Fortune Business Insights report, the global digital signature market is estimated to grow at 29% CAGR to reach $8 billion by 2027. The market is dominated by players like DocuSign and Adobe. Box plans to address this market with its latest acquisition. Box itself believes that the digital signature market will grow to more than $20 billion in the years to come as more companies globally will adopt the solution for multiple users. It expects improved security features to become more important to ensure compliance with regulations like HIPPA for health-care applications and FINRA for financial transactions. As of now, Box does not plan to compete with DocuSign and Adobe, and will continue to offer integrations with these vendors for document signatures. Instead, it believes its digital signature strategy needs to focus on bringing “e-signature to the masses.

Its stock is currently trading at $22 with a market capitalization of $3.52 billion. It touched a 52-week high of $26.47 in March and a 52-week low of $14.90 in April last year.

Disclosure: All investors should make their own assessments based on their own research, informed interpretations, and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article.

This segment is a part in the series : Cloud Stocks


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