Dropbox files for IPO of up to $500 million

Dropbox co-founders Drew Houston and Arash Ferdowski

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. Still, revenue growth has slowed and the vast majority of its more than 500 million users don't pay.

Dropbox has done very well over the past two years. While being one of the most anticipated tech IPOs for several years now, it has raised $600 million in funding. The company is still operating at a yearly loss, albeit a shrinking one, dropping from $326 million in 2015 to nearly $112 million in 2017. This comes ten years after the company was founded, nine years after CEO Drew Houston turned down an offer from Steve Jobs, and a few years after it was valued at $10 billion. The company confidentially filed for its IPO in October previous year, but the information did not become publicly available until Friday. The big unanswered question at this stage would be to see if the company would manage to achieve the $10 billion valuations, as it did in the private market. That said, each year its sales have been growing while its losses shrink.

"Our business depends on our ability to retain and upgrade paying users, and any decline in renewals or upgrades could adversely affect our future results of operations", the company said in the filing when referring to one of its "risk factors". Dropbox became cash-flow positive in 2016, but recorded a loss of $111 million that year after pouring money back into its product development efforts.

About $576 million of Dropbox's 2017 revenue came from the USA, with $531 million coming from other countries.

There's no word yet on when Dropbox stock will be available on the market, but it plans to trade on Nasdaq with the "DBX" symbol.

The San Francisco-based company, which started as a free service to share and store photos, music and other large files, competes with much larger technology firms such as Alphabet Inc.'s Google, Microsoft Corp. and Amazon.com Inc.as well as cloud-storage rival Box Inc. That's a statistic that the company acknowledges it needs to improve. CEO Houston received restricted shares worth $109.6 million, and Ferdowsi was handed stock worth $46.7 million.

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