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Box (BOX) Prices $315M Senior Notes in Private Offering

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Box, Inc. (BOX - Free Report) recently announced the pricing of $315 million principal amount of 0% convertible senior notes due 2026 in a private placement.

The sale of the notes is expected to close on Jan 14, 2021, subject to customary closing conditions.

The notes will be offered to qualified institutional buyers only and in accordance with Rule 144A under the Securities Act of 1933, as amended. The company intends to give the initial purchasers an option to buy up to an additional $30 million aggregate principal amount of notes.

The company expects the net proceeds from this offering to be $306.3 million. It also expects to use some of the proceeds to pay the cost of the capped call transactions. The remaining net proceeds will be used for working capital and general corporate purposes.

In connection with the pricing of the notes, Box plans to enter into other privately negotiated capped call transactions with initial purchasers or their affiliates and another financial institution.

Box, Inc. Price and Consensus

Box, Inc. Price and Consensus

Box, Inc. price-consensus-chart | Box, Inc. Quote

Cash Position

At the end of fiscal third-quarter 2021, Box’s cash and cash equivalents totaled $275.4 million compared with $271.9 million at prior quarter-end. Non-current debt was $50 million in the fiscal third quarter.

During the last reported quarter, cash flow from operations was $45.1 million, up $36.2 million year over year, while free cash flow was $26.2 million, up $27.9 million. Its strong free cash flow generation is encouraging.

In our view, the stock offering is expected to boost financial flexibility and help the company meet financial obligations in an efficient way. Moreover, it provides ample scope to deploy capital for long-term growth opportunities and rewarding higher returns to stockholders.

Bottom Line

Box is currently enriching cloud content management and AI platforms by developing a rich technology partner ecosystem. Its platform is presently integrating with some of the biggest enterprise technology providers such as Microsoft, Apple, IBM, Google and Salesforce.

Over the past few years, the company has been making constant efforts to grow add-on products. Its increasing customer base remains a positive. Further, strong focus on advancement of the global go-to-market strategy will continue to help it in attracting customers from the global market to its platform.

Markedly, the company continues to expand international presence with more than 2,000 global employees based in the Americas, APAC and Europe. However, rising cloud competition from players like Google and Microsoft remains a concern.

Zacks Rank and Stocks to Consider

Box currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Alphabet (GOOGL - Free Report) , Etsy, Inc. (ETSY - Free Report) and Inuvo, Inc. (INUV - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth for Alphabet, Etsy, and Inuvo is currently projected at 16.9%, 29.2% and 30%, respectively.

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