Web-storage company Dropbox Inc. raised the curtain Friday on its long-awaited initial public offering, which is set to be one of the biggest tech debuts of the past few years.
While there were more than 500 million registered Dropbox users at the end of past year, only 11 million of them were paying subscribers, the firm said in the regulatory filing. "Combined with the concurrent increase in our base of paying users, we experienced a reduction in our cost of revenue, an increase in our gross margins, and an improvement in our free cash flow in the periods presented", the company said in its S-1 statement, referring to 2015 through 2017. Dropbox shares could begin trading as early as the week of March 19.
Expectedly, the company disclosed in the filing that its business depends on the ability to convert registered users into paying users, and also the ability to retain and upgrade those paying users. It will also be interesting to see how Dropbox fares on Wall Street compared to Snap's disappointing performance over the previous year.
The filing indicates the San Francisco-based firm, valued most recently at $10 billion, plans to raise at least $500 million, though that figure could be a placeholder that could change as pricing of the offering firms up.
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It will be interesting to see how this offering compares to Spotify's reported plans to directly list itself on the New York Stock Exchange. "This is the world we want to live in". The filing noted the company ended 2017 with a $1 billion deficit, though its rate of net losses had decreased from nearly $326 million in 2015 to almost $112 million in 2017.
Goldman Sachs Group Inc., JPMorgan Chase & Co., Deutsche Bank AG and Allen & Co. are leading the offering.
The filing also said co-founder and Chief Executive Drew Houston (pictured) has 24.4 percent of voting power in the company.
Companies often grant large blocks of equity to executives when they go public, saying such awards are necessary to keep them on the job.