Dropbox Sets IPO Target Valuation at $7 Billion to $8 Billion

Dropbox CEO Drew Houston    
   Drew Angerer  Getty

The online file storage company will be valued at between $7 billion and $8 billion when it conducts its initial public offering in NY, below its $10 billion valuation after its last funding round.

In a filing Monday, the company said it expects its shares to price in a range of $16 to $18. 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.

Dropbox has gotten a vote of confidence from one major investor, announcing Monday that Salesforce will purchase $100 million of its shares in a private placement that will occur immediately after the IPO closes.

The valuation represents a fall on its last private funding round in 2014 which valued the company at $10bn. The company will be listed on the Nasdaq exchange under the ticker "DBX", according to filing. Most of Class B shares are owned by Houston, Ferdowsi and investors Sequoia Capital, Accel, and T. Rowe Price. Data from Dealogic indicates that the Dropbox IPO would be the biggest tech IPO since Snap's offering a year ago. This will allow Dropbox to set a higher IPO price per share without causing disruption among its current investors.

The company is now losing money.

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. But later that year, the company's investment bankers warned that it couldn't match that valuation in an IPO and investor Fidelity Investments slashed the estimated worth of Dropbox by nearly 20 percent. The cloud storage firm said its free Basic plan is the main vehicle for drawing in new paying customers. In the same period, the company's net losses dropped by almost $100 million. The remaining 98 percent will accounted for by the Class B shares now held by CEO Drew Houston and other major investors.

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