Published: Tue, March 13, 2018
Money | By Hannah Jacobs

Dropbox IPO to value business at $7bn

Dropbox IPO to value business at $7bn

Salesforce, which previously invested $5 million into the company, will own less than 5% of Dropbox's total shares.

While the company is inching closer to profitability, Dropbox outlined in its deal prospectus its focus to get more of those users to pay up.

In a filing with the SEC, Dropbox said it will sell 26.8 million Class A shares at United States dollars 16-18 each. The company said it earned $1.1 billion in revenue previous year, up from $603.8 million in 2015.

While venture financing remains high, startup valuations have mostly stabilized in the United States. The company will face major competitors such as Alphabet's (NASDAQ: GOOGL) Google and Apple Inc. In the same period, the company's net losses shrank to $112 million from $210 million. Despite the losses, the company is free-cash-flow positive and expects the cash it currently has to be enough to support its cash needs right now.

Dropbox was founded in 2007 and booked $1.1 billion in sales for the 12 months ended December 31, 2017. At the midpoint of the proposed range, Dropbox would command a fully diluted market value of $7.6 billion.

Dropbox's Monday filing kicked its investor roadshow into high gear touting the IPO.

"The IPO is a slap in the face to investors of the 2014 round" of Dropbox, he added.

"The move by the popular cloud storage company Dropbox makes sense, as upbeat equity market conditions should allow it to raise the $500 million it seeks at a favorable valuation", AMEinfo reported Forbes as saying.

Chief Executive Officer and co-founder Drew Houston will hold 22 percent of the shares outstanding after the offering, or 24 percent of the voting power, according to the filing. The company has warned potential investors that it isn't focusing on profits just yet though, as it plans to start spending more on research and development to strengthen its infrastructure and hire more employees.

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