Published: Mon, March 12, 2018
Business | By Max Garcia

Dropbox Sets IPO Terms, Whittles Valuation by Up to 20%

Dropbox Sets IPO Terms, Whittles Valuation by Up to 20%

Dropbox, the provider of a cloud-based platform that enables users to store and share content, said in a new S-1 filing that it plans to sell 36 million Class A shares at $16 to $18 apiece.

The file-sharing company is targeting a public market capitalization of $6.3 billion to $7.1 billion in its initial public offering, according to a filing Monday.

A series of funding rounds had valued Dropbox at US$10 billion, but investment bankers were doubtful about matching that valuation. At the high end of its offering size, it'd be the third-biggest IPO from an enterprise technology IPO in the past three years, according to data compiled by Bloomberg. The proceeds include United States dollars 100 million from a concurrent private placement of shares at the same price as the IPO to Salesforce.

Dropbox will probably not initially be loved on public markets as much as it was by venture capitalists.

The performance of Dropbox - along with Spotify, which is also expected to trade publicly in the early spring - will be watched closely by venture capitalists as the two marquee IPOs of the first half of the year. Arash Ferdowsi, co-founder and director, will hold 8.8 percent of the shares.

The San Francisco-based company has touted its business as a path to unleashing creative energy and inspired work.

The company had 11 million paying users and over 500 million registered users on December 31, 2017-just over 2% of its registered users pay Dropbox for the service. It doesn't make any money; it lost $111.7 million on $1.11 billion in revenue past year, and revenue growth has been declining.

The company's net loss narrowed to US$111.7 million in 2017 from US$210.2 million in 2016.

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