A few days ago, a foreign media published columnist Jeff Reeves's article said that for the cloud computing industry, corporate sales and marketing expenditures are high, creating high revenue is not difficult, but to get Profits are by no means an easy task. He believes that the cloud computing market is difficult to maintain, and excessively optimistic investment will cause trouble.
Jeff Rivers believes that the cloud storage company Box, which recently submitted an IPO application, has suffered huge losses in recent years. The other two cloud service industry companies, Workday and NetSuite, have not yet made a profit, and the losses are quite serious. He seems to be marking that the cloud computing industry may become the next tech bubble
The article said that Box just submitted the S-1 listing application document this week, becoming the latest company to ride the wave of cloud computing, but investors need to start to see the current bubble of technology stocks.
Box's filing with the US Securities and Exchange Commission (SEC) shows: "We have a history of accumulated losses and are not expected to make a profit in the foreseeable future."
“We have recorded huge losses in successive years since its inception in 2005. The net loss for the fiscal year ended December 31, 2011 was $50.3 million, and the net loss for the fiscal year ended January 31, 2013 was $112.6 million, as of 2014. The net loss for the fiscal year ended Jan. 31 was $168.6 million. As of January 31, 2014, we had a cumulative loss of $361.2 million."
To make matters worse, the company's planned IPO financing amount is only $250 million - this amount is not even enough to cover the two-year loss that would occur at the current rate of burning.
However, Box is not "lonely." For all areas of cloud computing, it is quite difficult to make a profit.
In the case of Workday, the company is different from Box, which provides cloud software for accounting and human resources managers. But it is also a member of the cloud services industry.
Workday's results announced in February showed that its sales and marketing costs reached $197 million in the fiscal year ending January 31, accounting for more than 55% of the company's total revenue ($354 million). Workday was in a huge loss when it went public in 2012 and is not expected to make a profit this year and next.
The same is true of its competitor NetSuite. Its latest performance report shows that it has suffered another large loss in the year ended December 31 last year, with sales and marketing expenses reaching $210 million, accounting for 63% of the company's total revenue (more than $333 million).
NetSuite, which went on sale at the end of 2007, has not yet achieved profitability. For it, getting new customers is more urgent than getting break-even.
The cloud computing industry is not that simple: NetSuites and Workdays can easily generate large revenues because their target market is large because large companies like Oracle and SAP are not as flexible as they are, still relying on their traditional technology. business.
However, considering the current huge marketing expenditures, it is obviously not so easy for them to seek growth in the cloud computing industry – and therefore lacks revenue.
The article believes that the valuation of companies in the cloud computing industry is too high, there is no room for fault tolerance. Investors who accept this kind of story may be too simplistic about the challenges and opportunities that corporate technology stocks face today.
At present, there may not be signs of a cloud stock crash, but the bursting of the bubble will cause many cloud computing companies to end in tragedy.
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