Nov. 18, 2013 10:03 p.m. ET
Online-storage service Dropbox Inc. is raising a funding round that could value it at more than $8 billion, according to people familiar with the situation, though new figures reveal its revenue growth is decelerating.
The talks with investors to raise around $250 million are still early and no valuation has been agreed upon, said a person familiar with the discussions.
Dropbox is seeking a rich price tag from investors at a time when tech financiers are willing to pay up for a piece of the hottest Silicon Valley companies. An $8 billion valuation would double the $4 billion worth that investors placed on San Francisco-based Dropbox in late 2011.
The pace of sales growth at Dropbox has slowed in recent years as consumer Internet giants such as Google Inc. GOOG -0.19% Google Inc. Cl A U.S.: Nasdaq [SUP]$[/SUP]1031.55 -2.01 -0.19% Nov. 18, 2013 4:00 pm Volume (Delayed 15m) : 1.75M AFTER HOURS [SUP]$[/SUP]1031.55 0.00 0.00% Nov. 18, 2013 6:36 pm Volume (Delayed 15m): 8,206 P/E Ratio 29.25 Market Cap $344.63 Billion Dividend Yield N/A Rev. per Employee $1,059,710 11/19/13 The Morning Download: Startups... 11/18/13 Google in $17 Million Settleme... 11/18/13 Yahoo to Encrypt Data Center T... More quote details and news » GOOG in
Your Value Your Change Short position and Amazon.com Inc. AMZN -0.81% Amazon.com Inc. U.S.: Nasdaq [SUP]$[/SUP]366.18 -2.99 -0.81% Nov. 18, 2013 4:00 pm Volume (Delayed 15m) : 2.71M AFTER HOURS [SUP]$[/SUP]366.14 -0.04 -0.01% Nov. 18, 2013 5:57 pm Volume (Delayed 15m): 24,267 P/E Ratio 1307.79 Market Cap $167.61 Billion Dividend Yield N/A Rev. per Employee $793,371 11/18/13 Dropbox Seeks Funding Round at... 11/15/13 Postal Service Records Seventh... 11/15/13 Zulily Shares Jump 71% After I... More quote details and news » AMZN in Your Value Your Change Short position have entered the online-storage market, according to three people familiar with the company's financials. The startup tallied $116 million in sales last year, more than doubling its $46 million in revenue in 2011. The year before, it nearly quadrupled sales from $12 million.
Dropbox expects sales of more than $200 million this year, according to one of those people, but it isn't clear how much more.
"With over 200 million users and 4 million businesses, Dropbox has continued and strong momentum," said Ana Andreescu, a Dropbox spokeswoman.
Investors have already pegged Dropbox's value at a higher revenue multiple than some of the top makers of business technology. At its earlier valuation of $4 billion, the company's 2012 sales of $116 million gave it a multiple of 34 times revenue. Hewlett-Packard Co. HPQ -0.83% Hewlett-Packard Co. U.S.: NYSE [SUP]$[/SUP]25.00 -0.21 -0.83% Nov. 18, 2013 4:00 pm Volume (Delayed 15m) : 11.49M AFTER HOURS [SUP]$[/SUP]25.01 +0.01 +0.04% Nov. 18, 2013 4:42 pm Volume (Delayed 15m): 104,354 P/E Ratio N/A Market Cap $48.45 Billion Dividend Yield 2.32% Rev. per Employee $340,552 11/18/13 Salesforce, H-P Get Even Close... 11/18/13 Salesforce.com's Loss Narrows ... 11/13/13 Google, H-P Halt Chromebook Sa... More quote details and news » HPQ in Your Value Your Change Short position bought storage hardware and software provider 3PAR Inc. in 2010 for about 10 times expected sales, after winning a bidding war with Dell. Today, cloud-computing company Workday Inc. WDAY -2.72% Workday Inc. U.S.: NYSE [SUP]$[/SUP]73.67 -2.06 -2.72% Nov. 18, 2013 4:01 pm Volume (Delayed 15m) : 1.03M P/E Ratio N/A Market Cap $13.14 Billion Dividend Yield N/A Rev. per Employee $201,907 09/18/13 Salesforce and Workday Cloud P... 09/18/13 Oracle Ekes Out Slight Growth ... 09/11/13 Workday Event Triggers Cloud D... More quote details and news » WDAY in Your Value Your Change Short position is one of the highest-flying technology stocks, valued at roughly 30 times expected sales according to Capital IQ estimates.
Investors have lately shown interest even in startups with fledgling or no business models. In recent weeks, Pinterest Inc. banked $225 million from Fidelity Investments and other backers at a $3.8 billion value despite its lack of revenue; Snapchat Inc., a free messaging service that makes no money, turned down a buyout offer worth billions from Facebook Inc.
Slowing sales growth puts pressure on Dropbox CEO Drew Houston to accelerate a push into business software. Dropbox is trying to make a difficult shift from focusing on consumers to serving more demanding corporate customers, many of whom have blacklisted the app due to fears that it could be used to introduce viruses into corporate networks or send corporate data to places it shouldn't go.
Last week, Dropbox introduced a new product for businesses that creates one storage locker for personal items and another for business, each with its own password and files. It also allows companies to remotely wipe company content and monitor the data flows of that content.
"It'll be like having your house keys and your company's key-card on one keychain and with you at all times," wrote Mr. Houston and his co-founder Arash Ferdowsi on the company blog on Nov. 13 announcing the service.
Dropbox raised $250 million in its 2011 financing from Goldman Sachs and top venture firms including Sequoia Capital, Index Ventures and Accel Partners. Most of that money is still in the bank, Mr. Houston said at a recent technology conference in San Francisco.
Dropbox's latest funding effort was reported earlier by Bloomberg.
—Rolfe Winkler contributed to this article.
Write to Douglas MacMillan at [email protected] and Spencer E. Ante at [email protected]
Online-storage service Dropbox Inc. is raising a funding round that could value it at more than $8 billion, according to people familiar with the situation, though new figures reveal its revenue growth is decelerating.
The talks with investors to raise around $250 million are still early and no valuation has been agreed upon, said a person familiar with the discussions.
Dropbox is seeking a rich price tag from investors at a time when tech financiers are willing to pay up for a piece of the hottest Silicon Valley companies. An $8 billion valuation would double the $4 billion worth that investors placed on San Francisco-based Dropbox in late 2011.
The pace of sales growth at Dropbox has slowed in recent years as consumer Internet giants such as Google Inc. GOOG -0.19% Google Inc. Cl A U.S.: Nasdaq [SUP]$[/SUP]1031.55 -2.01 -0.19% Nov. 18, 2013 4:00 pm Volume (Delayed 15m) : 1.75M AFTER HOURS [SUP]$[/SUP]1031.55 0.00 0.00% Nov. 18, 2013 6:36 pm Volume (Delayed 15m): 8,206 P/E Ratio 29.25 Market Cap $344.63 Billion Dividend Yield N/A Rev. per Employee $1,059,710 11/19/13 The Morning Download: Startups... 11/18/13 Google in $17 Million Settleme... 11/18/13 Yahoo to Encrypt Data Center T... More quote details and news » GOOG in
Your Value Your Change Short position and Amazon.com Inc. AMZN -0.81% Amazon.com Inc. U.S.: Nasdaq [SUP]$[/SUP]366.18 -2.99 -0.81% Nov. 18, 2013 4:00 pm Volume (Delayed 15m) : 2.71M AFTER HOURS [SUP]$[/SUP]366.14 -0.04 -0.01% Nov. 18, 2013 5:57 pm Volume (Delayed 15m): 24,267 P/E Ratio 1307.79 Market Cap $167.61 Billion Dividend Yield N/A Rev. per Employee $793,371 11/18/13 Dropbox Seeks Funding Round at... 11/15/13 Postal Service Records Seventh... 11/15/13 Zulily Shares Jump 71% After I... More quote details and news » AMZN in Your Value Your Change Short position have entered the online-storage market, according to three people familiar with the company's financials. The startup tallied $116 million in sales last year, more than doubling its $46 million in revenue in 2011. The year before, it nearly quadrupled sales from $12 million.Dropbox expects sales of more than $200 million this year, according to one of those people, but it isn't clear how much more.
"With over 200 million users and 4 million businesses, Dropbox has continued and strong momentum," said Ana Andreescu, a Dropbox spokeswoman.
Investors have already pegged Dropbox's value at a higher revenue multiple than some of the top makers of business technology. At its earlier valuation of $4 billion, the company's 2012 sales of $116 million gave it a multiple of 34 times revenue. Hewlett-Packard Co. HPQ -0.83% Hewlett-Packard Co. U.S.: NYSE [SUP]$[/SUP]25.00 -0.21 -0.83% Nov. 18, 2013 4:00 pm Volume (Delayed 15m) : 11.49M AFTER HOURS [SUP]$[/SUP]25.01 +0.01 +0.04% Nov. 18, 2013 4:42 pm Volume (Delayed 15m): 104,354 P/E Ratio N/A Market Cap $48.45 Billion Dividend Yield 2.32% Rev. per Employee $340,552 11/18/13 Salesforce, H-P Get Even Close... 11/18/13 Salesforce.com's Loss Narrows ... 11/13/13 Google, H-P Halt Chromebook Sa... More quote details and news » HPQ in
Your Value Your Change Short position bought storage hardware and software provider 3PAR Inc. in 2010 for about 10 times expected sales, after winning a bidding war with Dell. Today, cloud-computing company Workday Inc. WDAY -2.72% Workday Inc. U.S.: NYSE [SUP]$[/SUP]73.67 -2.06 -2.72% Nov. 18, 2013 4:01 pm Volume (Delayed 15m) : 1.03M P/E Ratio N/A Market Cap $13.14 Billion Dividend Yield N/A Rev. per Employee $201,907 09/18/13 Salesforce and Workday Cloud P... 09/18/13 Oracle Ekes Out Slight Growth ... 09/11/13 Workday Event Triggers Cloud D... More quote details and news » WDAY in Your Value Your Change Short position is one of the highest-flying technology stocks, valued at roughly 30 times expected sales according to Capital IQ estimates.Investors have lately shown interest even in startups with fledgling or no business models. In recent weeks, Pinterest Inc. banked $225 million from Fidelity Investments and other backers at a $3.8 billion value despite its lack of revenue; Snapchat Inc., a free messaging service that makes no money, turned down a buyout offer worth billions from Facebook Inc.
Slowing sales growth puts pressure on Dropbox CEO Drew Houston to accelerate a push into business software. Dropbox is trying to make a difficult shift from focusing on consumers to serving more demanding corporate customers, many of whom have blacklisted the app due to fears that it could be used to introduce viruses into corporate networks or send corporate data to places it shouldn't go.
Last week, Dropbox introduced a new product for businesses that creates one storage locker for personal items and another for business, each with its own password and files. It also allows companies to remotely wipe company content and monitor the data flows of that content.
"It'll be like having your house keys and your company's key-card on one keychain and with you at all times," wrote Mr. Houston and his co-founder Arash Ferdowsi on the company blog on Nov. 13 announcing the service.
Dropbox raised $250 million in its 2011 financing from Goldman Sachs and top venture firms including Sequoia Capital, Index Ventures and Accel Partners. Most of that money is still in the bank, Mr. Houston said at a recent technology conference in San Francisco.
Dropbox's latest funding effort was reported earlier by Bloomberg.
—Rolfe Winkler contributed to this article.
Write to Douglas MacMillan at [email protected] and Spencer E. Ante at [email protected]