Dropbox Files To Raise $500M In An IPO

Although the public at large had to wait until February 2018 to hear about the Dropbox IPO, the San Francisco based company had filed for its Initial Public offering in January. The stated goal of the Dropbox IPO was to raise $500 million for its collaboration service and cloud-based file storage. This followed on from Dropbox’s 2017 performance when the company raised $1.1 billion in revenue for a net loss of $111 million. The company has 500 million users registered for its service, 11 million of them paying for the service. The latest private valuation available at the time when the IPO was announced, gave the company a value of $10 billion. Although the $111 million loss in 2017 still seemed sizeable, it was noted by observers that Dropbox’s yearly revenue has been increasing steadily, while its losses have been slashed from a high of $326 million, which occurred in 2015.

The prospect of a Dropbox IPO attracted a great deal of attention from observers and investors in the tech industry, and this was not surprising since the Dropbox IPO was likely to be the first big tech Initial Public Offering of the year, and it occurred against the backdrop of an unsettled stock market, with prices rising and falling in quick succession; early February saw a particularly low dip, though prices had bounced back to a significant degree by the time that the IPO was announced. Observers could not also but remember Snap’s IPO in 2017, which had garnered results that were widely considered to be disappointing. Was a portent of what would happen to Dropbox?

The Dropbox IPO also garnered attention because many observers of the tech sector had been drawn to the company’s innovative model, by which it attracts paying customers through two premium plans; alongside its business sales, this model has raised a great deal of money for Dropbox, and it was considered that the model had much up-selling potential. It was also noted, however, that despite such successes, this company’s revenue growth had started to slow down. A possible reason for this slowing revenue growth, which might impact on the Dropbox IPO was the size and the quality of the competition which it faces. Both Microsoft and Google are offering their own cloud-storage software which they offer to their customers as part of wider service packages. Dropbox also faces competition from smaller companies which offer dedicated cloud-storage and collaboration services, one example of which is Box. Another factor which might well impact on this IPO is the ongoing debate in the USA on the subject of net neutrality. This is important because Dropbox relies on speedy network connections; without them their customers will be separated from the information which they have stored. If the proposed regulation succeeds in imposing usage-based pricing, which is a distinct possibility, then Dropbox could begin to suffer. There is certainly a lot to consider when we look at the Initial Public Offering of Dropbox.

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