Cloud storage giant DropBox is set to make a stock market debut amid some interesting business and financial data.
Although the necessary documentation has been filed with US regulators, a debt and initial share price are yet to be set.
The firm is said to be targeting at least a $500 million fund round.
“Over the past decade, Dropbox has pioneered the worldwide adoption of file sync and share software. We’ve since expanded our capabilities and introduced new product experiences to help our users get work done,” says the formal filing documentation.
“As one of the few large-scale collaboration platforms that serves customers of all sizes, we also have an opportunity to reach a broad population of independent knowledge and creative workers. We believe that this market hasn’t traditionally been included in IT spending estimates.”
Scary financials for investors
The filing reveals information about the company that calls into question the wisdom of backing the float.
DropBox has 500 million registered users with 400 billion files in the cloud – but only 11 million pay for the service. The average annual subscription for paying users is $112 a year.
But the underlying financials are scary for investors.
The company passes $1 billion in revenue for the first time in 2017, but the downside was a $112 million net loss.
DropBox has never made a profit. In 2016, the loss was $210 million, while 20156 saw the tech giant burn through $326 million. The gross margin is 67%.
Net losses and declining revenue
The IPO paperwork contains some key warnings:
- “Our revenue growth rate has declined in recent periods and may continue to slow in the future”
- “We have a history of net losses, we anticipate increasing expenses in the future, and we may not be able to achieve or maintain profitability”
Some of the recent losses are due to switching from Amazon AWS S3 hosting to self-hosting – with $53 million spent on a datacentre that has trigged $75 million spending saving over two years.
The competition is huge – Amazon Drive, Microsoft’s OneDrive and Google Docs are all closing in on the same space as DropBox.
CEO Drew Houston currently holds just under 25% of the company and stands to make the biggest return from the IPO. DropBox has around 2,500 staff worldwide.
