Dropbox’s Mega-Round Comes with Bullish Revenue Projections

So, how did Dropbox get itself valued at approximately $4 billion and rope in a quarter-bil from investors including Index Ventures and Goldman Sachs?

For one, the company aims to grow its revenue almost ten-fold over the next couple of years, peHUB has learned. Projections provided to investors in its most recent round have Dropbox’s client base growing to about 300 million in 2013. That’s quite a spike from the 25 million users it reportedly had earlier this year.

Then, there’s the money. By the end of 2013, Dropbox expects revenue of $260 million, which the company expects will translate into Ebitda of about $165 million, according to projection data. Earlier, when breaking the news of the Dropbox funding and mega-valuation, now-unpaid blogger Michael Arrington took what he called an educated guess at projections for the company’s 2011 revenues—“revenue will be more like $30 million”—and pretty much hit the nail right on the head. It is expected Dropbox will reel in revenue in the mid-$30s this year.

In fact, much has been made of Dropbox’s revenue figures, upon which the company has (and continues to) not provide comment. Earlier this year, it was suggested Dropbox’s sales could hit $100 million in 2011. Like some other highly valued and wildly popular startups (case in point: Zynga), Dropbox’s revenue stream comes from a small portion of its overall client base.

But what Dropbox is counting on for its revenue growth—taking a path right into Box.net’s wheelhouse—is its enterprise users (Dropbox for Teams). So, even if it fails to get hundreds of millions of customers, the bigger client accounts may well be what drives that multi-billion dollar valuation, and a big portion of that $260 million revenue goal coming just over 24 months from now.

With its expanded ambition comes an even greater challenge: how to protect the prized files of corporate clients. In other words, once software-as-a-service becomes security-as-a-savior. Perhaps this is why Dropbox’s founders said nobody would take money off the table after it was anointed King Cloud—and perhaps how the company will continue to defend its territory from startups (like Box.net) and strategic titans (Google, Microsoft and the iCloud) alike. What are they going for? Only the contracts of about 100,000 businesses and more than three-quarters of the Fortune 500 and the rights and capacity to manage data in an industry projected to be worth tens of billions of dollars.

Index Ventures led the $250 million round in Dropbox last month, joined with new investors Goldman Sachs, Greylock Partners, Benchmark and Institutional Venture Partners. Prior backers Sequoia, Accel and individual investors tagged along, too. Prior to its mega-round and $4 billion valuation and October’s super-round, Dropbox had raised a meager $7.2 million across multiple rounds. The company did not respond to requests for comment.

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