Dropbox Boosts IPO Price Range 10% to $7.8 Billion Valuation

(Bloomberg) -- Dropbox Inc. upped the price range for shares in its initial public offering, marketing the stock for $18 to $20 apiece and boosting its potential market valuation by almost 10 percent.

The file-sharing company is now aiming to raise as much as $720 million, offering 36 million shares of its Class A common stock, according to a filing Wednesday with the U.S. Securities and Exchange Commission. It had previously set the price range at $16 to $18 per share to raise as much as $648 million. Orders for the stock this week were concentrated around the top of that range, people familiar with the matter said Tuesday.

Raising more money from public market investors would help close the gap between Dropbox’s last private funding round, which valued the company at $10 billion in 2014, and its debut market capitalization. Pricing shares at $20 apiece would value Dropbox at more than $7.8 billion, based on the total number of shares outstanding after the offering. Including restricted stock units, that number rises to as much as $8.6 billion.

Increasing the target IPO price range is uncommon among the largest technology and communications listings. None of the 10 U.S. offerings bigger than $500 million in the past three years have done so during the marketing period, with only Altice USA Inc. increasing the number of shares being offered, according to data compiled by Bloomberg. Six of the 10 later priced above the marketed range.

San Francisco-based Dropbox is among a class of well-funded, closely watched technology companies that have achieved a private valuation of more than $1 billion. The allure of new innovation and the relative difficulty of getting a chance to buy shares in a private company helped drive up the valuations of many closely held businesses. Public market investors tend to rely more on financial analysis when deciding whether a valuation is fair.

Cash Positive

In the four years since it last raised money, Dropbox has posted healthy revenue growth and turned cash-flow positive. Revenue increased more than 30 percent last year to $1.1 billion from $845 million in 2016. In the same period, the company’s net losses shrank to $112 million from $210 million.

Dropbox also agreed to sell $100 million in stock to Salesforce.com Inc.’s venture capital arm in a private placement concurrent with the IPO, the filing shows. Last week, the companies announced a partnership to integrate and sell Salesforce’s customer relationship management technology with Dropbox’s storage and collaboration tools.

Goldman Sachs Group Inc., JPMorgan Chase & Co., Deutsche Bank AG and Allen & Co. are leading the offering. The company plans to list on Nasdaq Global Select Market under the symbol DBX.

(The potential valuation of Dropbox including restricted stock units was corrected in an earlier version of this story.)

To contact the reporter on this story: Alex Barinka in New York at abarinka2@bloomberg.net.

To contact the editors responsible for this story: Elizabeth Fournier at efournier5@bloomberg.net, Michael Hytha, Molly Schuetz

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