Box pushes back against Starboard, says board changes are not warranted

Box continues to fend off pressure from activist investors at hedge fund Starboard Value LP.

Box continues to fend off pressure from activist investors at hedge fund Starboard Value LP, who are unhappy that the cloud storage company hasn't aggressively capitalized on the enterprise trends driven by the Covid-19 pandemic. 

In a statement Monday, Box said Starboard's bid to add members to the Box board are unwarranted given recent growth trends and the $500 million investment it received from KKR.

"Box is in the strongest financial position of its history, serving more than 100,000 customers around the world while continuing to build on its well-established leadership position," Box said in a statement. "The company is on track to deliver the vision of the Content Cloud, reflecting significant innovation, a strengthened partner ecosystem, and an expanded product portfolio. Box also has a clearly defined plan to accelerate revenue growth while driving further margin improvement."

Box is in the midst of executing a transition and growth strategy that aims to position the company as the cloud layer for content management via integrations with systems of record in the enterprise. The company said it has made substantial progress on the effort in fiscal 2021, with revenue of $771 million, an 11% increase year-over-year.

Nonetheless, Starboard is stepping up the pressure on Box and appears to be positioning for a takeover of the Box board. For an activist investment firm such as Starboard, the end game is to see Box acquired, but Box is intent on remaining a standalone company. 

"With a more efficient and productive go-to-market strategy, and customer momentum underway, Box is primed to capture a $55-billion market opportunity," Box said in its statement. "The company has set long-term financial targets, and the Board and management remain confident in Box's ability to grow revenue between 12% to 16% and achieve operating margins of between 23% to 27% by fiscal 2024."

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