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Dropbox Idea Proposal (DBX)

Dropbox Idea Proposal (DBX)

Will Dropbox be able to grow its subscription base in a competitive cloud-storage market?

Report Available: May 9, 2018


Blueshift’s initial research found significant enthusiasm for DBX during its recent IPO. The file sharing and cloud storage company’s revenues have been growing and its losses narrowing. However, DBX faces a tough fight to grow its subscription revenue with BOX, MSFT and others competing for users and possibly pushing down prices.



  1. DBX is a developer of cloud storage software that allows users to share files and access them from any device. Its shares are up almost 50% since the company’s March 23 IPO on NASDAQ, pushing its market cap over $12 billion. Its backers include CRM, whose venture capital arm invested $100 million in a pre-IPO placement, leading to speculation that CRM could eventually acquire DBX.
  2. DBX’s revenues grew 31% in 2017 to top $1 billion, though the growth represented a deceleration from its 40% jump in 2016. DBX has narrowed its losses in each of the past three years but still posted a $111.7 million loss for 2017. The company says most new subscribers come through word-of-mouth referrals, thus keeping in check its sales and marketing expenses, which totaled $314 million last year. Executives said their 2015 decision to build their own infrastructure and reduce their reliance on AMZN Web Services has saved almost $75 million in operating costs.
  3. DBX boasts more than 500 million registered users but only about 2% are paying subscribers, with $112 in average revenue per paying user. Paid accounts – which start at $8.25 per month for individual users and $12.50 per user per month for teams – offer more storage space and additional features, including security and administrative functions aimed at enterprises.
  4. DBX’s challenge is to grow its base of paying subscribers in a crowded field that includes BOX, MSFT and GOOG/GOOGL. Some critics worry that competition will send pricing on a race to zero for this type of software, especially since MSFT’s and GOOG/GOOGL’s document management solutions are free as part of larger enterprise software suites. In February, MSFT said current customers of BOX, DBX or GOOG/GOOGL could switch to its OneDrive platform and use it for free for the remainder of their contracts.
  5. Blueshift Research’s May 4, 2017, report on BOX found it to be the best platform for enterprise-level document sharing and storage, but noted the company will have a big fight to remain in the lead. Sources said competitors such as DBX and MSFT were improving their solutions.


How will DBX boost its subscription numbers? What are the key drivers for getting free users to convert to paid? How do DBX’s features and user interface compare to competitors? Does it have the security and other controls that appeal to enterprises? When subscribers leave DBX, where do they go? To answer these and other questions, Blueshift will gather data and issue a market research report from independent sources in the following areas: Enterprise IT executives, Small business IT executives, Third-party app developers, and Industry specialists.


Companies: Dropbox Inc. (DBX), Alphabet Inc. (GOOG/GOOGL), Inc. (AMZN), Box Inc. (BOX), Microsoft Corp. (MSFT)


Research Begins: April 23, 2018


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