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What is known about the possible IPO Dropbox: rumors, difficulties and numbers



Dropbox intends to take another step towards its long-drawn-out IPO. It is reported that the startup is negotiating with Goldman Sachs on the preparation of documents. Public offering of the company’s shares has been predicted since 2014, but it has been postponed all this time. Many expect Dropbox to enter the market as the largest since the IPO Snap.

How much is Dropbox rated


For all the time of its existence, the company has attracted investment several times . In 2007, when the idea of ​​Dropbox itself appeared, the service first received $ 15,000, and then $ 1.2 million, in 2008 - $ 6 million from Sequoia Capital.
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The second round of Dropbox funding took place in 2011. Despite the fact that at this time the company had problems - she was accused of lying to users about data protection - a group of investors led by Index Ventures invested $ 250 million in a startup, and because of what the company's valuation was $ 4 billion. However, by 2013 year cost increased to $ 8 billion

Once again, Dropbox applied for investments in 2014. The new service-oriented business policy and promising earnings appealed to investors, and some of them, led by BlackRock, invested another $ 350 million in a startup . This increased the value of the company to $ 10 billion.

As a result, in 2014, Dropbox became the most expensive Silicon Valley start-up following the results of raising funds not through public markets. And soon after that, the talk about the company's IPO began.

Long road to IPO


In 2013, the service, initially focused on individuals, was seriously improved. It became convenient not only for personal, but also for business needs - there were ample opportunities for companies to administer the work of employees with corporate information, access to which is protected. And if ordinary users preferred to use Dropbox for free, then a corporate account costs at least $ 12.5 per person per month (price for a group of 3 users).

At that moment, Dropbox seriously preoccupied with its monetization began to hire sales professionals and poach well-known representatives of the Internet industry . Her staff has grown to 500 employees, among whom were the head of Facebook mobile partnerships, Henri Moissinac and Kevin Egan, who has built salesforce sales direction.

By March 2016, 500 million people registered in the service. Already after Dropbox became the most expensive young technology company, rumors about a possible early placement of shares spread across Wall Street. In 2015, Box Inc. put up its securities for sale. - Dropbox competitor that fueled interest in the company's IPO. However, Dropbox with a similar step was in no hurry.

Perhaps the reason was that market investors, unlike private ones, are paying much more attention to the company's profitability. According to Thomson Reuters, revenues from technology IPOs fell from $ 34 billion in 2014 to $ 6.7 billion in 2015 and decreased to $ 2.9 billion in 2016. Because of this, last year, Uber Technologies and Airbnb Inc. decided to postpone the exchange to better times, fearing that the IPO will reduce their capitalization. Dropbox also did not conduct a public offering of shares either in 2015 or in 2016.

The management of the company all this time was not idle, but gently preparing investors for its IPO. Over the past year, Dropbox regularly publishes its key financial indicators, although it is not obligated to do so.

In June 2016, Dropbox reported that the company's cash flow had become positive. In January of this year, it became known that the company achieved annual revenue of $ 1 billion . Finally, in April, the company announced that it had reached positive EBITDA, which is a key metric, especially for technology companies.

All these events individually already give a positive sign to experienced investors, but actively the news about the upcoming IPO of Dropbox this year began to spread after the news that the company had started searching for underwriters. Goldman Sachs Group Inc. is expected to lead the consultant. JPMorgan Chase & Co. can also take part in the event.

True, none of the banks has yet been approved, and Dropbox itself has not made an official IPO statement. Rumors about the placement of shares, none of the participating companies have not yet confirmed.

Technically, Dropbox can refuse IPO even after negotiations with potential underwriters. But the media expects that the placement of shares will take place in the 3-4 quarter of 2017. Investors are waiting for IPO Dropbox with such impatience, not only because the process was delayed, and 2016 was stingy with interesting events in this area. The fact is that the IPO Dropbox threatens to become the largest since the time of entering the Snapchat (Snap company).

Will IPO Dropbox be grand


The IPO will be the key test of the value of Dropbox since it was valued at $ 10 billion in 2014. But experts expect that as a result of the placement of shares, the company's capitalization will decrease .

The easiest way to predict the value of Dropbox after an IPO is to rely on the experience of Box Inc.’s competitor. Private investors estimated the latter at $ 2.4 billion, but on the market its price dropped to $ 1.67 billion. The ratio of the company's market capitalization to its annual revenue in the last 12 months was 5.68 .

If we apply the same ratio to Dropbox, whose annual income is $ 1 billion, then we will get an estimate of $ 5.68 billion. This is 43.2% lower than the previous estimate of $ 10 billion.

Interestingly, according to the Wall Street Journal, Dropbox shares experienced a similar fate in the private market. The company's share price fell from $ 19 in the first quarter of 2014 to an average price of $ 10.16 in the second quarter of 2016, reflecting a 46% decline in valuation.

But keep in mind that Dropbox now has a positive EBITDA and claims it is growing at a fast pace. This will most likely allow Dropbox to be rated higher than Box. However, it is also likely that the Dropbox score will be lower than in the previous round of funding.

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Source: https://habr.com/ru/post/336288/

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