Dropbox Finally Makes It Public That It's Going Public

Dropbox Finally Makes It Public That It's Going Public

Dropbox has filed for an initial public offering in the United States, documents released on Friday revealed, in what is likely to be the largest float since Snapchat owner Snap. Last month Bloomberg reported that the company had filed a secret IPO, meaning the company's S-1 was bound to drop soon-and here we are today.

The filing reveals Dropbox has lost more than US$1 billion since its inception.

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.

However, Dropbox warned on competition in the market, saying that "certain features of our platform compete in the cloud storage market with products offered by Amazon, Apple, Google, and Microsoft, and in the content collaboration market with products offered by Atlassian, Google, and Microsoft". In 2016, Dropbox said it had 500 million users and 150,000 Dropbox Business users, so while overall user growth is stagnant, more companies are paying for its product. However, these are significantly improved margins as the company lost nearly $210 million in 2016 and $326 million in 2015. Their shares will vest if Dropbox's stock achieves a series of price hurdles ranging from US$20 to US$60 within a decade of the offering's close, the filing said.

The company's biggest challenge is explaining to Wall Street what differentiates Dropbox from its many competitors, Box Chief Executive Aaron Levie told Reuters on Friday.

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Dropbox admits that out of its 500 million users, only 11 million are paying subscribers, and that 90% of its revenue comes from this group.

The IPO is likely to attract a lot of attention because Dropbox's service is so widely used. That's a statistic that the company acknowledges it needs to improve.

It shouldn't be a surprise that Dropbox and tech giant Hewlett Packard Enterprise are cozy with each other considering that former HPE CEO Meg Whitman is on Dropbox's board. CEO Houston received restricted shares worth $109.6 million, and Ferdowsi was handed stock worth $46.7 million.

Even though the track records profitability, the company faced a net loss of $111.7 million in the previous year.

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