Last Friday cloud storage company Dropbox filed for a $500 million IPO under the ticker symbol DBX on NASDAQ, reports CNBC. According to the company’s SEC S-1 filing, Dropbox earned $1.11 billion in revenue in 2017, a 31 percent increase over the prior year. It also posted a net loss of $111.7 million last year, an improvement over a net loss of $210.2 million in 2016.

Currently, Dropbox has more than 500 million registered users in 180 countries, storing more than 400 billion pieces of content.  Of those users, 11 million are paid subscribers, paying average revenue of $111.91 per user in 2016. Founded in 2007, the company’s value proposition is providing cloud storage for content that can be accessed anywhere from any device.

‘We want to free up our users to spend more of their time on the work that truly matters. Our mission is to unleash the world’s creative energy by designing a more enlightened way of working,’ said Dropbox in the SEC filing.

‘We believe the need for our platform will continue to grow as teams become more fluid and global, and content is increasingly fragmented across incompatible tools and devices. Dropbox breaks down silos by centralizing the flow of information between the products and services our users prefer, even if they’re not our own,’ Dropbox added.

‘By solving these universal problems, we’ve become invaluable to our users. The popularity of our platform drives viral growth, which has allowed us to scale rapidly and efficiently,’ Dropbox said.

The company reports the following revenue for the last three years:

The company reports the following net losses for the same three-year period: 

To scale the business for growth, Dropbox expects expenses to increase in the near term. These expenses include increasing the amount of technical infrastructure needed to support growth, research and development expenses, rent for a new corporate headquarters, and general and administrative expenses.

Based on industry trends, Dropbox believes that the need for its cloud-based storage platform will continue to grow. By providing a centralized, easily accessible home for content, the company has created a global sharing network, allowing users to share content to just about everyone. They will believe this will help the company grow. To date, however, 90 percent of Dropbox’s growth has been generated by users sharing Dropbox with others. To be sustainable, Dropbox may need to add sales staff to complement their previously successful strategy.

Currently, Dropbox users can set up a free account and access 2 GB of free storage. To exceed that storage limit, users can earn more storage by sharing Dropbox with other users or upgrade to a paid plan. With only 11 million of its 500 million customers paying for its product, Dropbox has a huge market of potential subscribers already using its product.

The company’s subscription plans include:

• Dropbox Plus (1 TB of storage): $9.99 a month or $99.00 a year
• Dropbox Professional (Plus + additional features): $19.99 a month or $199 a year
• Dropbox Business – Standard, Advanced and Enterprise

[Editor’s Note: Rates vary by country.]

Dropbox will use money raised from the IPO to upgrade more users to subscriptions and to expand its integration with third-party software applications. The date for the IPO has not yet been determined.

Insider Take:

As long-time users of Dropbox, we can see the potential for Dropbox to expand its subscriber base by first incentivizing its current free users to become subscribers. They have 489 million customers who are currently not paying for their product. Even if a small percentage of them subscribed, Dropbox could eventually become profitable and create long-term sustainability for itself. This would require a shift in strategy – focusing on upgrades and features and investing in a sales team – rather than just creating a huge user base.

To be successful, Dropbox must remain easy to use and access, and it must offer subscribers features they can’t get elsewhere or features that are so useful it would be hard to leave. As other companies like Amazon and Google reduce their unlimited free storage plans, Dropbox could also potentially tap those markets to scoop up users who become disenchanted with their current cloud storage providers.