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Online cloud storage company Dropbox recently filed an S-1 prospectus as part of its intent to take its stock to the publicly traded markets under the ticker symbol DBX as early as March. As a direct competitor to Box (NYSE: BOX), the company is entering a fiercely competitive space where it will also compete with tech giants like Microsoft and Alphabet.
But Dropbox's unique approach of targeting individual users in hopes that they will become product evangelists at their organizations has fueled impressive growth and operating leverage. Further, Dropbox's over a half billion registered users makes the platform a force to be reckoned with, even if it's going up against tough competition.
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Here are some of the most notable takeaways from DropBox's S-1 filing, which highlights financials for 2017 and provides insight into the company's strategy.
Dropbox views its registered users as salespeople
Dropbox boasts over a half of a billion registered users. Though only a small fraction of these users are paying for Dropbox, this doesn't mean the bulk of its users aren't important to Dropbox's business. Adopting a strategy Dropbox refers to as "viral, bottom-up adoption," Dropbox considers its 500 million registered users its "best salespeople."
"They've spread Dropbox to their friends and brought us into their offices," Dropbox explained. "Every year, millions of individual users sign up for Dropbox at work. Bottom-up adoption within organizations has been critical to our success as users increasingly choose their own tools at work."
To this end, Dropbox said an impressive 90% of its revenue is generated from self-serve channels, where users purchase a subscription on their own through the Dropbox mobile app or website. Further, the company notes that more than 40% of Dropbox Business teams include a member that was previously paying for one of its individual plans. This suggests paying individual subscribers often vouch for Dropbox to their workplace, helping sell business subscriptions.
Registered users are not unique users
Importantly, Dropbox clarifies in its S-1 filing that there are fewer unique users than registered users since one person may register more than once on its platform. "As a result, we have fewer unique registered users that we may be able to convert to paying users," Dropbox said.
But Dropbox estimates that "approximately 300 million of our registered users have characteristics -- including specific email domains, devices, and geographies -- that make them more likely than other registered users to pay over time."