Eyeing a Dropbox IPO
Can the tech unicorn cash in on corporate users?
Of the big IPOs expected to occur this year,
Dropbox’s could be one of the most intriguing. When Dropbox last raised money, in
2014, it was valued at a hefty $10 billion.
But large investors such as Fidelity and T.
Rowe Price slashed the value of the Dropbox shares on their books by as much as 50
percent in 2015. The key concern: could
a company whose free file storage service
is used by hundreds of millions of people
find enough paying customers to make a
Investors may be in for a pleasant surprise. According to the company, sales
are now running at more than $1 billion
a year, up from around $400 million in
2014. That’s thanks in part to growing
sales of Dropbox Business, a souped-up
version of the free app that costs $150
per employee per year. The company has
been cash-flow positive since early 2016,
even as it has made heavy investments in
engineering, sales, and IT infrastructure.
Now CEO and cofounder Drew
Houston is leading a new strategic charge.
In addition to selling utilities to keep digital files safe and accessible, Dropbox
intends to offer software that businesspeo-ple use for hours each day to create content and get work done. “This is a mature,
very, very powerful software company,”
says Bryan Schreier, a partner with venture capital firm Sequoia Capital, which
was an early investor in the company.
That doesn’t mean Dropbox will live
up to that heady $10 billion valuation,
which even at the time was widely seen
as a sign of a bubble about to burst. Even
at an annualized revenue of $1 billion,
investors would need to think the company is worth 10 times its current sales
on the day it goes public. These days, the
average cloud software company trades
at just 4. 7 times revenue, according to
Bessemer Venture Partners.
Still, Schreier and other investors
insist they are no longer worried about