At a $9.4B market capitalization and a $1B 2017 revenue run-rate, Dropbox would have a 9.4x price to sales multiple, double that of Box at its IPO.
With Dropbox reportedly hiring bankers and considering an IPO for later this year, we dug into our private market data to see how publicly traded cloud storage and file-sharing company Box compares to nearly public Dropbox.
Here’s how they stack up.
When Box went public in January 2015, the company priced its IPO at $14 a share, exiting at a valuation of $1.7B, or approximately $600M less than private markets’ $2.3B valuation of Box. On a price-to-sales basis, the valuation represented 5.8x its 2015 forward revenue guidance at the time, of $290M. One year later, Box ended 2016 with a market capitalization of $2.2B and $400M of revenue, representing a trailing price-to-sales multiple of 5.5x.
Currently, as of market close on July 3rd, 2017, Box had a market capitalization of about $2.4B and projected 2017 revenues of $500M, which would represent a modest current price to projected sales multiple of 4.7x. To compare, in January of this year Dropbox CEO Drew Houston announced that his firm was expecting an annualized revenue run-rate of $1B for FY2017. If true, at its current $9.4B valuation Dropbox would have a 9.4x current price to projected sales multiple, double that of Box.
Looking more closely at Dropbox’s valuation, the company has seen two significant valuation jumps since 2010. First, the company received $250M in Series B funding in 2011, officially vaulting the company into the unicorn club at a $4.3B valuation. A little more than two years later, the company closed a $350M Series C with participation from a number of financial services investors, in a round that valued the company at $9.4B.
However, extrapolating from reported and rumored revenue numbers in 2013, 2014, and 2017 (run-rate), we estimate that Dropbox’s revenue growth has slowed. Between 2013 and 2014, revenue increased 100%, jumping from $200M to $400M. The $1B number revealed by Houston indicates that growth may have fallen to 25% year-over-year, as the company works to acquire stickier enterprise clients in an increasingly crowded cloud storage market.
Still, Dropbox may have a leg up on the competition; in June 2016, Drew Houston shared that Dropbox was free cash flow positive, meaning that the company’s future hinges on real revenue, not capital infusions.
For comparison, Box also saw revenue growth slow from 2015 to 2016, to 32%, down from 40% growth in the prior year. Box has lost money every year for the past three years, and has not turned free cash flow positive even after a 25% increase in operating income and a lowering of operating expense growth to just 9% (down from 31% growth in the prior year).
Lastly, in comparing private market investors, only one investor invested in both Dropbox and Box: Salesforce Ventures. And, while Dropbox has seen lots of interest from financial services institutions acting as both investors and creditors, Box saw almost no private market interest from the same investor subset.
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