Music Service Spotify Just Filed for a ‘Direct IPO’

  • Spotify filed the paperwork to list shares on the New York Stock Exchange.
  • The company is planning to do a “Direct IPO” which bypasses the typical Wall Street process.
  • Spotify is the largest music streaming service with 71 million paid suscribers.

Spotify has filed paperwork for a direct public offering, a risky and unusual process to quickly list its shares as it races with Apple to become the de-facto standard in the fast growing music streaming business.

The 10-year-old Swedish company filed an F-1 prospectus with the SEC on Wednesday for the offering. Spotify plans to list shares on the New York Stock Exchange under the ticker “SPOT.”

Spotify pioneered the music streaming business, which has overtaken digital downloads, as well as the ravaged CD business, to become the largest segment of the music industry in the US.

With 71 million paid subscribers, Spotify is currently the world leader, but it is facing stiff competition from Apple, whose three-year old Apple Music service has already racked up 36 million subscribers. Google and Amazon are also pushing their own streaming music services.

That competition has forced Spotify to spend heavily on music licensing, to maintain a broad catalog of music, as well as on marketing and R&D. The spending has resulted in hefty and growing losses. In 2017, Spotify said it had a net loss of €1.2 billion ($1.5 billion USD), compared to a net loss of €539 million the year before.

The company’s revenue increased 39% year-on-year in 2017, totaling roughly €4.1 billion, or $5 billion.

Spotify is offering its shares directly to investors, bypassing the typical Wall Street process where banks are hired to find buyers for the shares. Its F-1 filing listed a valuation of $1 billion, though that figure is likely a placeholder number that could change as the offering gets closer.

The direct IPO means that Spotify will sell shares without a set price, without a set level of supply of shares, and without a lock-up on existing investors. And the lack of the so-called “bookbuilding” process typically handled by underwriters means that Spotify’s stock won’t have a safety net if investors turn sour on the company.

“The public price of our ordinary shares may be more volatile than in an underwritten initial public offering and could, upon listing on the NYSE, decline significantly and rapidly,” Spotify warned in its prospectus.

This post originally appeared on Business Insider.

Dropbox Just Filed for an IPO

  • Dropbox just filed for its initial public offering and will trade on the Nasdaq under the symbol DBX.
  • The S-1 form Dropbox filed with the Securities and Exchange Commission revealed that the company lost $111 million on revenue of $1.1 billion last year.
  • This makes Dropbox the first of the many high-valued tech “unicorns” expected to file to go public in 2018.
  • Dropbox was last valued at $10 billion in a 2014 venture-capital round.

The file-sharing company Dropbox filed its S-1 form on Friday with the Securities and Exchange Commission, meaning one of the most anticipated initial public offerings in tech is well on its way.

Dropbox, founded in 2007, posted revenue of about $1.1 billion last year, up 31% from $844.8 million in 2016. But the company still isn’t profitable, according to the filing.

The bright side is that the company’s losses have also decreased over the past three years.

Dropbox saw losses of $111.7 million last year — an improvement from a loss of $210.2 million it showed in 2016 and of $325.9 million in 2015. The company also reported $305 million in positive free cash flow last year.

The San Francisco-based Dropbox has been expected to go public since news reports surfaced last year that it had retained Goldman Sachs and JPMorgan Chase to work on the offering, which the S-1 form appears to confirm.

Dropbox, which was last valued at $10 billion in a 2014 venture-capital round, will list on the Nasdaq under the symbol DBX. The initial stock price is likely to be set closer to the date it debuts on the markets, which is still unclear.

The company will sell shares in a three-class structure — the same one Snap used when it went public last year. Class C shareholders won’t have any voting power at the company, whereas Class A shareholders will have one vote and Class B shareholders will have 10.

Dropbox competes with Box and Atlassian, two business-software companies valued on the public markets at $3.2 billion and $12.4 billion as of Friday afternoon.

This post originally appeared on Business Insider.

Dropbox Is Finally Going Public and Filed for a $10 Billion IPO

  • Dropbox has filed IPO paperwork with the SEC confidentially, according to a Bloomberg report.
  • The company plans to list shares in the first half of 2018.
  • Its last known valuation of $10 billion was during a 2014 funding round.

Dropbox, the cloud computing storage company valued at $10 billion, has confidentially filed the paperwork for an IPO, according to a Bloomberg report on Thursday citing anonymous sources.

The IPO is expected in the first half of 2018, Bloomberg reported, marking the first high-profile tech listing of the year, and coming on the heels of Snap’s disappointing IPO in 2017. Uber, the most highly valued private tech company, is not expected to go public until 2019.

San Francisco-based Dropbox had been expected to list shares in an offering this year, after news surfaced last year that it had retained investment bank Goldman Sachs. Bloomberg said that JP MorganChase has also been tapped to serve as a lead underwriter on widely anticipated IPO. 

Dropbox says that more than 500 million people use its online software service, which allows consumer and business users to save documents in the cloud and access them from any device. Dropbox for Business, the premium product aimed at business users and considered its most important business going forward, has 200,000 customers the company says on its website.

Dropbox was not immediately available for comment.

“Cash is oxygen”

Dropbox’s financials results are not publicly known, but the company said in January 2017 that it was on track to generate $1 billion in revenue on an annualized run rate. CEO Drew Houston said in June 2016 that Dropbox was “cash flow positive,” an important gauge of financial health followed by Wall Street. But that doesn’t mean Dropbox’s business is profitable on a net basis yet.

“Cash is oxygen,” Houston said in an onstage interview at the time. “Even just being a dollar cash flow positive is a really critical threshold because it lets you control your destiny.”

The company’s last reported valuation of $10 billion came during a venture capital funding round in 2014.

If the company were to IPO at that valuation with $1 billion revenue, it would fetch a 10x revenue multiple. That’s richer than the 8x multiple that Box, Dropbox’s closest competitor in the enterprise business, fetched during its 2015 IPO.

Dropbox has been steadily building out its senior management team as it moves towards its market debut, bringing on experienced hands like former Google executive Dennis Woodside as COO and former Twitter product boss Todd Jackson, as its head of product.

This post originally appeared on Business Insider

Spotify Files Confidential IPO Documents, According to Reports

  • Spotify in December confidentially filed with the Securities and Exchange Commission for its initial public offering, Axios reported. 
  • Companies can file quietly to gauge interest from investors before deciding to publicize their IPO plans. 
  • Earlier this week, Spotify was slapped with a $1.6 billion lawsuit for allegedly streaming thousands of songs without compensating the publisher. 

Spotify has confidentially filed for its initial public offering, Axios’ Dan Primack reported on Wednesday. 

The music-streaming service based in Stockholm, Sweden, filed with the Securities and Exchange Commission at the end of December, the report said. It is aiming to list in the first quarter, Axios said. 

By filing in private, companies can test how interested investors are in buying their stock before going public with their intentions. This used to be available only to companies with less than $1 billion in revenue under the Jumpstart Our Business Startups Act, or JOBS Act. Last June, the SEC under Jay Clayton, the chairman appointed by President Donald Trump, expanded the privilege to all companies. 

On Tuesday, Wixen Music Publishing hit Spotify with a $1.6 billion lawsuit for allegedly streaming thousands of songs without compensation. Spotify agreed in May to pay over $43 million to settle a proposed class action alleging it failed to pay royalties.

Spotify declined to comment. 

This post originally appeared on Business Insider.