Published: Tue, March 13, 2018
Economy | By Shawn Conner

Dropbox's $7 Billion IPO Is a Third from Peak Valuation

Dropbox's $7 Billion IPO Is a Third from Peak Valuation

Dropbox plans to raise as much as $648 million by selling 36 million shares at between $16 and $18 per share in its initial public offering, the company said in a regulatory filing.

At the high end of that range, Dropbox would have a market value of about $7.1 billion, based on the number of shares outstanding after the offering.

"The midpoint of those pricing estimates mean the company would be valued at $7.5 billion". Those shares will be sold at the final IPO price and will be subject to a lockup period.

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As part of this IPO, Salesforce's venture arm has agreed to by $100 milion of Dropbox shares, according to the prospectus. The cloud storage company will start trading on the NASDAQ using the ticker symbol "DBX". That is down from its most recent valuation of $10 billion from previous private investors.

As a result, the IPO will be among the largest tech market debuts since Snap in March of 2017. Only Salesforce and Dropbox know what the customer overlap looks like right now, but they'll be hoping the combined feature set of both services add up to an offering that attracts customers away from the competition.

Dropbox also will reverse-split the current shares outstanding to inside investors at a ratio of 1.5 to 1.

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The number of paying users on its platform rose to 11 million in 2017 from 8.8 million the prior year, while average revenue per paying user was slightly up year on year to $111.9 million from $110.5 million.

In that regard, the Salesforce investment and integration, and its timing of being announced alongside the sober IPO range, is a notable vote of confidence in Dropbox. In the same period, the company's net losses shrank to $112 million from $210 million. Goldman Sachs, J.P. Morgan, Deutsche Bank, Allen & Company, BofA Merrill Lynch, RBC Capital Markets, Jefferies and Macquarie Capital are the joint bookrunners on the deal.

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