Dropbox Gave Three Executives $190 Million in Stock Before IPO

by Linda Olson February 24, 2018, 4:57
Dropbox Gave Three Executives $190 Million in Stock Before IPO

Dropbox filed documents with the SEC confidentially in January and had plans to go public the first half of 2018, Bloomberg reported. Dropbox shares could begin trading as early as the week of March 19. It will also be interesting to see how Dropbox fares on Wall Street compared to Snap's disappointing performance over the previous year.

Since then, Dropbox, which is based in San Francisco, has grown into one of the leading file-syncing services, though it faces stiff competition from Google, Microsoft and others.

Dropbox, which was founded in 2007, has been the subject of IPO rumors since at least 2013.

One of the company's most interesting risk factors is the shifting state of net neutrality regulation in the U.S. Because Dropbox relies on speedy network connections to provide its customers with the data they need, the company points out that internet providers implementing usage-based pricing or speeding up competing offerings could negatively impact its business.

According to its IPO prospectus, Dropbox now has 11 million paying subscribers (and 500 million registered users on the service).These subscriptions now account for 90% of the company's $1.1 billion in revenue. What's more, the company turned free cash flow-positive in 2016.

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Dropbox competitor Box listed on the public markets back in 2015.

Dropbox is popular among individuals users who like the simplicity of the company's cloud storage products, but it has struggled to make inroads in the enterprise space. "Historically, our business model has been driven by organic adoption and viral growth, with more than 90 percent of our revenue generated from self-serve channels", the filing said.

Converting existing users to the paid tier is at the top of the company's list, but the filing admits that their revenue growth rate has declined and could keep slowing. The IPO is likely to attract a lot of attention because Dropbox's service is so widely used.

"It has always been important to me and to Arash (Ferdowsi) to create a company with a diverse team and where everyone feels welcome", says Dropbox CEO Drew Houston.

The stock will trade under the ticker symbol DBX. LLC, BofA Merrill Lynch, RBC Capital Markets, Jefferies, Macquarie Capital, Canaccord Genuity, JMP Securities, KeyBanc Capital Markets and Piper Jaffray. "This is the world we want to live in".

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