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Dropbox sets IPO range $16-18, valuing it below $10B, as Salesforce ponies up $100M

After announcing an IPO in February, today Dropbox updated its S-1 filing with pricing. The cloud services and storage company said that it expects to price its IPO at between $16 and $18 per share when it sells 36,000,000 shares to raise $648 million as DBX on the Nasdaq exchange. In addition to that, Dropbox announced that it will be selling $100 million in stock to Salesforce — its new integration partner — right after the IPO, at a price per share equal to the initial offering price. A specific date has not yet been set for Dropboxs listing later this month. The IPO pricing values the company at between $7 billion and nearly $8 billion when you factor in restricted stock units — making it the biggest tech IPO since Snap last year, but still falling well below the $10 billion valuation that Dropbox crept up to back in 2014 when it raised $350 million in venture funding. Many will be watching Dropboxs IPO to see if it stands up longer term and becomes a bellwether for the fortunes and fates of many other outsized startups that many have also expecting to list, including those that have already filed to go public like Spotify, as well as those that have yet to make any official pronouncements, like Airbnb. Some might argue that its illogical to compare a company whose business model is built around cloud storage with a travel and accommodation business, or a music streaming platform. Perhaps especially now: at a time when people are still wincing from Snaps drastic drop — the company is trading more than 30 percent down from its IPO debut — Dropbox presents a challenging picture. On the plus side, the company has helped bring the concept of cloud storage services to the masses. Riding on the wave of mobile devices, lightweight apps, and faster internet connections, it has changed the conversation about how many conceive of handling their data and offloading it off of their devices. Today, Dropbox has more than 500 million users in more than 180 countries. On the minus side, only around 11 million of those customers are paying users.  The company reported around $1.1 billion in revenues in 2017, representing a rise on $845 million in 2016 and $604 million in 2015. But its unprofitable, reporting a loss of $112 million in 2017. Again, thats a large improvement when you compare Dropboxs 2016 loss of $210 million in 2016 and $326 million in 2015. But it does beg more pressing questions: Does Dropbox have a big plan for how to convert more people into paying users? And will its investors have the patience to watch its business models play out? In that regard, the Salesforce investment and integration, and its timing of being announced alongside the sober IPO range, is a notable vote of confidence in Dropbox. Salesforce has staked its whole business model around cloud services — its ticker may be CRM, but its logo is its name inside a cloud — and its passed into the pantheon of tech giants with flying colors. Having Salesforce buy into Dropbox not only shows how its bolstering its new partner Dropbox in the next phase, but Id argue also gives Dropbox one potential exit strategy. (Salesforce, after all, has been interested in playing more directly in this space for years at this point.)

Dropbox sets IPO price range of $16 to $18 per share for possible $7 billion valuation

Dropbox hopes to price the initial public offering of its stock between $16 and $18 per share, the company said today in an update to its IPO filing that would place it well below its $10 billion private valuation. The company filed its prospectus last month with the U.S. Securities and Exchange Commission. As is common, it did not offer a price range or possible valuation for the IPO, which is expected to take place next week. In the update filed today, Dropboxs target range could make it worth as much as $7 billion, according to Reuters, and allow it to raise up to $742 million. The company was previously valued at $10 billion, following a 2014 funding round. However, the filing also emphasizes that these figures remain preliminary. The San Francisco-based company reported $1.1 billion in revenue last year, with a net loss of $111 million. It has more than 500 million registered users, including 11 million paying users. The big drop in valuation is an indicator of the challenges that unicorns will face as they search for exits, either through IPOs or acquisitions. With Spotify also headed toward an IPO in the coming weeks, investors will get to render a verdict on whether private investors drove the valuations of these companies too high as the companies sought to remain private. Dropbox also revealed that it had sold $100 million worth of stock to Salesforce Ventures in a private transaction. Those shares will be sold at the final IPO price and will be subject to a lockup period.