Report: Dropbox is working with Goldman Sachs to prepare for an IPO
Ten years after hitting the scene, file-sharing giant Dropbox Inc. may finally be ready to take the first serious steps towards an initial public offering of stock.
The offering would present another sign that more technology companies are looking to IPO in a year in which offerings have come in fits and starts. Today, the real-estate service Redfin Corp. went public at $15 a share, above the range estimated earlier. Shares closed up 44 percent on the day. Also today, sources told TechCrunch that subscription clothing firm Stitch Fix confidentially filed for an IPO.
Anonymous sources told Bloomberg on Thursday that Dropbox is working with Goldman Sachs Group Inc. to prepare the documents necessary for an IPO. They expect the collaboration to culminate with Box hiring the bank as the lead advisor for the public offering. One of the main reasons for the pick appears to be that Goldman Sachs has previously advised the company on several funding rounds and, most recently, a $600 million credit line.
JPMorgan Chase & Co. is reportedly negotiating with Dropbox about a role in the IPO as well. It too has a shared history with the company, having been the lead bank in the credit raise that Goldman Sachs helped plan.
Bloomberg’s sources said that the public offering may happen as soon as this year. The same time frame was provided by the Reuters report that first revealed Dropbox is seeking underwriters for a potential IPO a few weeks ago. There’s always a chance that the plan will be called off for one reason or another, especially since some recent offerings, such as those of Snap Inc., Cloudera Inc. and Blue Apron Inc. didn’t do very well or shares fell when subsequent earnings reports disappointed investors. Cloud storage startup Tintri Inc. delayed an IPO and lowered the price before going public last month.
But Dropbox looks well-positioned to hit the stock market from several standpoints. The first is financial. Dropbox Chief Executive Drew Houston (pictured) divulged at the start of the year that his company is on track to achieve a $1 billion annual revenue run-rate.
He added in an April interview that it’s generating a profit excluding interest, taxes, depreciation and amortization. He also pointed out that this combination is rare for a fast-growing tech firm of its size, which Wall Street will no doubt take into account.
Another factor to consider is that Dropbox’s investors are likely hoping for an exit sooner rather than later given its first major funding round was in 2008. Not least, the cash infusion from an IPO could also be a boon for the company amid the intense competition in the file sharing market.
Dropbox has been investing aggressively in feature development over recent quarters to set its service apart. One of most notable products to have come out of the effort is Paper, a collaboration tool for editing documents that became generally available earlier this year.
Photo: JDLasica/Flickr
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