Dropbox Secures Credit Ahead of IPO
San-Francisco based company Dropbox is opening a credit facility worth 600 million. The plans come from registered sources who added that these resources were led by JP Morgan, Chase and Co. and involved another five banks. These arrangements for credit come from the company as it pushes towards its issuance over this year. Deals concerning the line of debt have gained commitments from the banks and are yet to be finalized. However, they are expected to have come to terms by Monday. The funding will grant this file-sharing startup more flexibility in its plans to go public.
Other financial institutions involved in the deal included Bank of America Corp., Deutsche Bank AG, Goldman Sachs Group Inc., Macquarie Group Ltd. and Royal Bank of Canada, according to sources.
Earlier, the company’s management had talked to banks concerning the feasibility of having an offering this year. Additionally, they wanted to make an estimate as to the amount of revenue the company would raise from public investors during its offering. However, the firm did not come to a final decision at that time concerning the date of its release. Company CEO Drew Houston appears to have changed his mind since last year when he had expressed sentiments to continue managing the company privately.
Financial analysts believe that the enterprise would be ready to go public before the end of the year. However, the banks that offered credit, as well as a Dropbox spokesperson, declined to comment on the issue. When pressed for information, however, the company said it was not being pressured to get into an offering as soon as possible.
Currently, Dropbox is edging closer to profitability. Further, the firm has a positive cash-flow with an annual revenue of over 1 billion being raised. The company’s reasons to get this credit have been assumed to be so as to gain more acquisitions or expand aggressively. These would, in turn, give the company a farther reach and increase the revenue raised each year. As a result, it would be likely that the enterprise would break even sooner. However, Dropbox apparently did not engage with a smaller credit facility to take on debt.
Since its beginning in 2007, the company has gained a huge clientele for its cloud-storage services. An estimated 200,000 business teams are part of the firm’s customer base, with Adidas being one of the most recent popular companies it serves. Additionally, Dropbox has 500 million registered users.
The company has been making efforts to diversify its services from file-syncing and sharing. Recently, it added features that allowed users to create Microsoft Office files from their phones and also included a document-scanning tool that clients could make use of with the help of their phone’s cameras. The company had a 10 billion valuation in 2014 making it one of Silicon Valley’s most valuable unicorn startups.
Dropbox’s competitor Box Inc. went public in a successful IPO in 2015. However, since its first pop in the market, the firm has had a steady decline in share value. Dropbox, nevertheless, appears on its way to a successful offering. This is as a result of the company’s management making adjustments to the functioning of the firm. Dropbox has established its own data centers and is currently independent of Amazon Inc.’s servers. Additionally, it has focused on having larger corporations in its clientele. These enable the firm to raise higher revenue.