Tech unicorn Dropbox files for US IPO

Georgia Reed
February 25, 2018

Dropbox said publicly February 23 that it has filed for an initial public offering after threatening to do so for more than five years.

We knew that it had already filed confidentially, but the company has now unveiled its filing, meaning the actual IPO is likely very soon, probably late March. Dropbox was most recently valued at $10 billion and is now seeking to raise $500 million.

Dropbox's move to go public isn't all that surprising, but it is an important step for the company and the larger tech industry. That's a sentiment the protagonists of The Emoji Movie - who learn to work together to accomplish their goals and self-actualise while giving back to the community they exist in - could nearly certainly empathise with. Dropbox became cash-flow positive in 2016, but recorded a loss of $111 million that year after pouring money back into its product development efforts.

Dropbox is popular among individuals users who like the simplicity of the company's cloud storage products, but it has struggled to make inroads in the enterprise space.

The group said it had 500m registered users, of which 100m had signed up since the start of 2017, and that it was generating around $112 in average revenue per paid user. The company plans to list on Nasdaq Global Select Market under the symbol DBX. Dropbox shares could begin trading as early as the week of March 19.

"As we strive to grow our business, we expect expenses to increase in the near term", Dropbox said.

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In its SEC filing affidavit, Dropbox said it brought in $1.1 billion in revenue previous year with a net loss of $111 million.

Dropbox noted in the filing that it is up against Amazon, Apple, Google and Microsoft in a competitive and fast-changing market. Further, the company has reported having 11 million paying users under its cart. The last private valuation for Dropbox was $10 billion in a 2014 funding round.

Similarly, on the financial side, Dropbox's revenue has grown from $603 million in 2015 to $1.1 billion just past year. The company said that in 2016, it was able to shrink it's cost of revenue by $35.1 million as part of its AWS migration, which it refers to as "Infrastructure Optimization". Therefore, the company didn't need to hire a lot of sales and marketing staff.

Exact pricing on the shares will arrive in the upcoming weeks from Goldman Sachs and JPMorgan Chase, who are leading this IPO.

Among institutional investors, Sequoia Capital, which led Dropbox's seed round in 2007 and first venture round the following year, owns 23 percent, followed by Accel at 5 percent and T. Rowe Price at 3.5 percent.

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