Economy

IPO Watch: Dropbox A Blockbuster?

IPO Watch: Dropbox A Blockbuster?

The online file storage company will be valued at between $7 billion and $8 billion when it conducts its initial public offering in NY, below its $10 billion valuation after its last funding round.

The IPO will see the cloud storage company sell 36 million shares for $16 to $18 apiece. On a fully diluted basis including stock options, the mid-range of the IPO price range gives the company a market capitalisation of around Dollars 7.4 billion.

Monday's SEC filing, which also mentioned the sale of $100 million in stock to the venture capital division of Salesforce.com, begins a period in which bankers and Dropbox executives will market shares.

Dropbox, which was valued at $10 billion in its 2014 funding round, would be one of the biggest USA enterprise technology companies to list domestically in several years.

Fears were growing yesterday that investors are becoming anxious about big technology listings after Dropbox said that it would float at a lower valuation than had been expected. This will allow Dropbox to set a higher IPO price per share without causing disruption among its current investors. That would make the offering the largest since Snap Inc.'s IPO previous year.

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Dropbox, which has 11 million paying users across 180 countries, said that about half of its 2017 revenue came from customers outside the United States.

Additionally, Salesforce Ventures, Salesforce's corporate investment group, "has been an investor in Dropbox since 2014", so clearly the collaboration and synergy is at a much deeper level than the usual partnership announcement. The cloud storage firm said its free Basic plan is the main vehicle for drawing in new paying customers. The company said it earned $1.1 billion in revenue past year, up from $603.8 million in 2015.

Leaders of high-growth technology companies often resist coming to public markets and offering full voting rights out of fear they will lose control of their companies.

The company's net loss narrowed to $111.7 million in 2017 from $210.2 million in 2016. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock.


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