Dropbox closed up c.35% at the end of its first day trading on the Nasdaq this past Friday. In the biggest tech IPO since Snap went public in 2017, Dropbox (DBX) listed its $756 million IPO with 31 million shares priced at $21 a share, surpassing the predicted range of $18 to $20. The stock opened at $29 a share and later closed at $28.48 a share. Dropbox’s initial market cap of $8 billion increased c.50% for a peak of $12 million midday Friday, following reported 2017 revenues of $1 billion across 500 million registered users.
In other enterprise SaaS news, the ongoing lawsuit between Google and Oracle this week set a major precedent for software companies, as Google lost a case involving copyright of Java’s open-source library which could not only potentially cost them billions in damages, but also change how tech companies approach software development. The ruling by an appellate court was announced on Tuesday, as Google was found to have violated copyright laws by using Oracle’s open-source Java software to build Android’s platform back in 2009. This overturns a ruling by a jury in 2012 that Java should not inherently be protected under copyright law. Google has not yet announced whether they would seek further recourse through appeals court judges, but this most recent outcome would mean that hundreds of software developers would have to pay to license their apps produced using Java, which could set a prohibitively expensive ruling for those seeking to build software moving forward.
The SaaS startup space this week saw Intercom’s announcement of a $125 million Series D round of funding being led by Kliener Perkins, with Google Ventures and Mary Meeker also holding stakes in the customer relationship business. Intercom co-founder and CEO Eoghan McCabe bills the company as the “next generation customer database that’s specifically built for internet business”, and attributes the success of the company to its “messaging-first approach” in helping its clients with customer acquisition and support. The funding will be put towards further development of its customer platform, which is being slated as a direct attempt to compete with Salesforce.
New in digital products business listings this week is a $100K sound visualization and art business, with proprietary state of the art technology allowing for unique and high quality soundwave art, rapid revenue growth reaching a 22% CAGR for the period 2015 to 2017, sales across a variety of mediums including digital downloads and e-commerce, high gross and net margins of c.80% and c.65%, respectively, over the last 12 months and low owner involvement. Also listed in digital products this week is an $86K video templates and marketing business with c.380,000 visitors and 2.4 million page views in the last eight months, a large catalogue of high-quality videos aimed at B2B and B2C video producers, simple cost structure allowing for a highly scalable business model and low owner involvement.
New in affiliate business listings this week we have a $72K online privacy and hosting business, with revenues diversified across a portfolio of seven affiliate websites and an authoritative brand with a proven, seven-year track record of success. Recurring payouts drive strong, stable earnings and owner involvement is low. If you are interested in any of these businesses, follow the respective link to request a prospectus.
Event activity in 2018 remains steadily busy, with founder Thomas heading off to Recurring Revenue in Marina Del Rey, CA on April 12. Shoot us an email if you will be in the area and would like to schedule a meeting. Additionally, a reminder that today and tomorrow are the final two days to purchase earlybird tickets for LTVConf, the premiere SaaS conference for those working and interested in the industry. Use code FEINTERNATIONAL for a further 50% discount on any ticket today and tomorrow.
Continue reading below for more on Dropbox’s IPO, the lawsuit between Google and Oracle, Intercom’s round of Series D funding, and Santander’s release of a payments app for Ripple.
Deal Highlights
New:
Digital Products – Sound Visualization & Art – $5K gross/mo
- Proprietary state of the art technology allowing for unique and high quality soundwave art
- Rapid revenue growth reaching a 22% CAGR for the period 2015 to 2017
- Sales across a variety of mediums including digital downloads and e-commerce
- Simple cost structure allowing for a scalable business model with high gross and net margins of c.80% and c.65% over the trailing 12 months respectively
- Low owner involvement
Yearly net profit: $37,000
Asking price: $100,000
Digital Products – Video Templates & Marketing – $3K gross/mo
- Strong and steady traffic with c.380,000 visitors and 2.4 million page views in the trailing eight months
- Large catalogue of high-quality videos aimed at B2B and B2C video producers
- Simple cost structure allowing for a highly scalable business model
- Low owner involvement
Yearly net profit: $31,000
Asking price: $86,000
Affiliate – Online Privacy & Hosting – $2.7K gross/mo
- Revenues diversified across a portfolio of seven affiliate websites
- Lucrative affiliate partnerships with some of the most dominant players in the niche
- Authoritative brand with a proven, seven-year track record of success
- Recurring payouts driving strong and stable earnings
- Low owner involvement
Yearly net profit: $30,000
Asking price: $72,000
Sold:
SaaS – B2B Social Media Marketing – $41K MRR
Affiliate – Dermatology – $9K gross/mo
Affiliate – Electronics & Gaming – $5.1K gross/mo
Affiliate – Automotive – $1.9K gross/mo
Affiliate – Parenting Resource – $3.3K gross/mo
In the News…
Dropbox Closes Up 35% at End of First Trading Day
After its first day of trading on the public markets, Dropbox closed more than 35% above the initial list price of the shares.
In the biggest tech IPO since Snap went public in 2017, Dropbox (DBX) listed its $756 million IPO with 31 million shares priced at $21 a share. Opening on the Nasdaq over 40% higher than the initial listing price at $29 a share, DBX closed over 35% higher at the end of the trading day at $28.48 a share. Dropbox’s initial market cap of $8 billion peaked 50% higher at $12 million by midday on Friday, following reported 2017 revenues of $1 billion and 500 million registered users when it was revealed that it would be going public in February. In 2017, Dropbox reported losses of $111.7 million, down nearly 50% from 2016’s losses of $210.2 million, despite managing heavy expenses for R&D in the product. Dropbox became free-cash-flow positive in 2016, reporting that over 90% of revenue comes from individually purchased subscriptions. CEO Drew Houston addressed competition from Apple, Google and Amazon with the following statement: “We’ve always lived in a competitive environment … and importantly all our growth has happened in that environment,” Houston said. “We don’t see Amazon in our space. You know, things can change. We don’t count anyone out.”
CNBC named Dropbox as a Top 50 Disruptor five times for the innovations the company has contributed to revolutionizing the industry.
Google Loses Copyright Battle with Oracle
Google this week lost a major copyright case against Oracle that could not only potentially cost billions in damages.
The most recent development in this eight-year lawsuit, from when Oracle first brought the case against Google in 2010 under the claim that Google’s Android infringes two patent copyrights in the Java software could change how tech companies approach software development. The appellate court found Google to be in violation of copyright laws in their using Oracle’s open-source Java software back in 2009 to build Android’s platform. This is the latest development in an eight-year lawsuit, from when Oracle first brought the case against Google in 2010 under the claim that Google’s Android infringes two patent copyrights in the Java software. This decision by the appeals court overturns a ruling by a jury in 2012 that Java should not inherently be protected under copyright law. Google has not yet announced whether they would take the decision to the full slate of judges to appeal the ruling, but this most recent outcome means that hundreds of software developers would have to pay to license their apps produced using Java, which could set a prohibitively expensive ruling for software developers moving forward.
This verdict, if upheld, will likely surpass the current record for damages awarded ina copyright case, which also currently belongs to Oracle after it sued SAP in 2010.
Intercom’s Round D of Funding
Intercom announced this week that they would be entering a series D round of funding for $125 million.
This Series D round is being led by Kliener Perkins, with Google Ventures and Mary Meeker also holding stakes in the customer relationship startup. Co-founder and CEO Eoghan McCabe bill the company as the “next generation customer database that’s specifically built for internet business,” and attributes the success of the company to its “messaging-first approach” to help its clients with customer acquisition and support. Intercom plans to use the funding to further develop its customer platform and double their R&D teams. According to McCabe, the company is “putting [their] foot on the pedal.” Atlassian, New Relic and Shopify are among the reported users of Intercom.
With a currently strong presence in the United States and Ireland, Intercom hopes to use this influx to further expand its geographic footprint across Europe and Asia, and build out their workforce to beyond 500 employees.
Santander Releases Ripple Payment App
Santander announced this week that they would partner with Ripple to release a money transfer app using xCurrent and RippleNet platforms, Ripple’s blockchain.
The release of the app was first alluded to this year at athe end of January of this year, when Ana Botin, Santander CEO, had mentioned the app’s launch in the company’s 2017 earnings presentation. Nathan Boston, UK CEO of Santander, said of the app’s release at International Fintech conference in London, “This spring, if no one beats us to it, we will be the first large retail bank to carry out cross-border payments at scale with Blockchain technology.” At the conference it was announced that same day mobile international payments would be possible in seconds, following test trials of a similar payment app in 2016 that proved Ripple’s technology could conclude transfers in less than a day.