Dropbox has filed an amended S-1 form with the U.S. Securities and Exchange Commission (SEC) regarding its initial public offering. The company intends to sell its 36.0 million shares in the range of $18 to $20 a piece, with an overallotment option for an additional 5.4 million shares. At the maximum price, the entire offering is valued up to $828 million. The company intends to list its shares on the Nasdaq under the symbol DBX.
The underwriters for the offering are Goldman Sachs, JPMorgan, Deutsche Bank, Allen, Merrill Lynch, RBC Capital Markets, Jefferies, Macquarie Capital, Canaccord Genuity, JMP Securities, KeyBanc Capital Markets and Piper Jaffray.
The structure of its shares is somewhat complex, so get ready:
We have three classes of authorized common stock, Class A common stock, Class B common stock, and Class C common stock. The rights of the holders of Class A common stock, Class B common stock, and Class C common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to ten votes per share and is convertible at any time into one share of Class A common stock. Shares of Class C common stock have no voting rights, except as otherwise required by law, and will convert into Class A common stock, on a share-for-share basis, following the conversion of all outstanding shares of Class B common stock into shares of Class A common stock and upon the date or time specified by the holders of a majority of the outstanding shares of Class A common stock voting as a separate class. Following this offering, outstanding shares of Class B common stock will represent approximately 98.0% of the voting power of our outstanding capital stock.
This company is a global collaboration platform, with which more and more of this content is created, accessed, and shared with the world. It serves more than 500 million registered users across 180 countries.
Ultimately, management believes the need for its platform will continue to grow as teams become more fluid and global, and content is increasingly fragmented across incompatible tools and devices. Dropbox breaks down silos by centralizing the flow of information between the products and services its users prefer.
Management also believes that its current registered user base represents a significant opportunity to increase revenue. It is estimated that roughly 300 million of registered users have characteristics — including specific email domains, devices and geographies — that make them more likely than other registered users to pay over time.
The firm detailed its finances as follows:
Our revenue was $603.8 million, $844.8 million, and $1,106.8 million in 2015, 2016, and 2017, respectively, representing an annual growth rate of 40% and 31%, respectively. We generated net losses of $325.9 million, $210.2 million, and $111.7 million in 2015, 2016, and 2017, respectively. We also generated positive free cash flow of $137.4 million and $305.0 million in 2016 and 2017, respectively, compared to negative free cash flow of $63.9 million in 2015.
The company intends to use the net proceeds from this offering to pay down its debt, with the remainder going toward working capital and general corporate purposes.