Dropbox files for public stock offering of $500 mln

Dropbox filed Friday for an initial public offering, seeking to raise an estimated $500 million for the Silicon Valley cloud storage startup. The San Francisco company claimed 500 million users in 180 countries and $1 billion in annual revenues in documents filed with the Securities and Exchange Commission. The valuation based on recent private investment in the group stands at around $10 billion, making Dropbox one of the biggest Silicon Valley venture-backed startups. Storing digital data from music and films to documents, presentations and images has become big business with the lifestyle shift to accessing content and services online from a cornucopia of internet-linked devices. Dropbox woos users with a free version of its online file-storing service, then entices with premium features to upgrade to paid subscriptions. While there were more than 500 million registered Dropbox users at the end of last year, only 11 million of them were paying subscribers, the firm said in the regulatory filing. "A majority of our registered users may never convert to a paid subscription at our platform," the startup warned. Dropbox noted that the actual number of people using its service might be lower because some register more than one account. While Dropbox has seen significant revenue growth since it was founded in 2007, the rate has started to slow. Dropbox has incurred losses annually since it has been in business, logging net losses of $111.7 million and $210.2 million respectively last year and the year before. The company had an accumulated deficit of $1.05 billion as of December 31, according to the filing. "As we strive to grow our business, we expect expenses to increase in the near term," Dropbox said. Dropbox also warned potential investors that it faces threats from hackers out to plunder potentially valuable data from the cloud. "We anticipate that these threats will continue to grow in scope and complexity over time," Dropbox said. Dropbox put out word in 2016 that encrypted user IDs and passwords of some 68 million clients stolen four years earlier were freshly leaked online. "We have responded to this event by expanding our security team and data monitoring capabilities and continuing to work on features such as two-factor authentication to increase protection of user information," Dropbox said in the filing.