Red Hot IPOs That Are Due To Hit You In 2015 - Part 1

  • Our three part series covers popular tech companies scheduled to IPO in 2015.
  • We will look at Airbnb, DropBox, and BOX in part 1.
  • We will look at the revenue and valuations for these IPO candidates.

IPO’s have drawn a great deal of interest following the record breaking Alibaba IPO in September 2014. With a lot of interesting companies scheduled to go public in 2015, our 3 part series on Red Hot IPOs will cover much talked about IPO candidates like Airbnb, DropBox, Box, Uber, Spotify, Snapchat, Pinterest and Square. In part-1, we'll take a look at DropBox, Box and Airbnb.

Airbnb IPO

Airbnb acts as a marketplace for shared accommodation renting. The San Francisco based company has thus far raised close to $800 million and is valued at $10 billion, following its latest round of funding in April 2014, when the company raised $450 million.

Airbnb has been facing legal challenges that threaten the core of its business model. Not long after San Francisco legalized Airbnb listings, a report released by New York Attorney General, Schneiderman, alleges that 75% of the company’s listings are illegal. Airbnb’s legal challenges could not only manifest in the form of reduced listings, but also fines or penalties with potential financial implications to the tune of $100 million.

Airbnb Revenue

Impressively, Airbnb listings have continued to grow, up from 350,000 listings last year, to 975,000 listings at last count. Similar is the case with Airbnb revenue, which doubled to $250 million in 2013. Airbnb revenue could touch $500 million in 2014 if the company can sustain this growth rate. Airbnb has made several acquisitions to expand its reach, both in terms of offerings and geographies, and could gain from these acquisitions.

Airbnb Valuations

Airbnb valuations of $10 billion represent a P/S ratio of 20, based on the Airbnb 2014 revenue estimate of $500 million. Airbnb is reportedly planning another round of fund raising which could value the company at $13 billion, translating to a price to sales valuation of 26. While that isn’t shocking for those who have been watching the tech IPO space, it’s scary nonetheless, because that multiple is only going to swell, as we approach the IPO date.

Given the impressive growth, legal challenges and the fact that Airbnb is now more highly valued than hotel chains like the Hyatt, the Airbnb IPO promises to be an exciting one.

DropBox IPO

Update: For more on DropBox, read Detailed IPO analysis of Dropbox

One of the most talked about IPO candidates is DropBox, the online cloud storage company. DropBox has raised a little over $600 million in funding from a bunch of investors that includes the likes of Accel Partners, Sequoia Capital, BlackRock and seed fund Y Combinator. Reports suggest that DropBox also secured $500 million in debt around April 2014. San Francisco based DropBox, also has offices in Australia and Ireland, as the company looks to expand its international user base. Currently the US accounts for about one third of DropBox users.

DropBox Revenue

DropBox hasn’t yet filed for an IPO, and no official figures are available. Based on a TechCrunch report on DropBox revenue, we’ve put together the graph below.

DropBox Revenue 2010, 2011, 2012, 2013 - Revenue Chart

DropBox Revenue 2014 Estimates

Dropbox revenue estimates indicate a revenue of 200 million during 2013. Based on this estimate, DropBox revenue growth rates have dropped, indicating that it didn’t double its revenue in 2013. Even assuming that DropBox revenue will double this year, 2014 revenue should be about $400 million.

DropBox Valuations

Following its latest round of funding in Jan 2014, when the company raised $350 million, DropBox valuations have reportedly touched $10 billion.

If the company does end 2014 with $400 million in revenue, DropBox’s $10 billion valuations translate to a price to sales ratio of 25. As we said before, not shocking, but scary nonetheless.

For now though, DropBox is one of those companies that has everybody excited. Exactly when they will be going public isn’t very clear. After raising $850 million in 2014 (equity and debt combined), DropBox CEO Drew Houston went on record saying that the company had a “full tank”, and that an IPO wasn’t an immediate priority. Expectations are that the DropBox IPO will take place in 2015.

BOX IPO

Update: Box went public in Jan 2015, with the Box stock jumping 66% above the IPO price on its first day of trading. Read our Box IPO analysis to check if you should jump in to grab the stock.

The BOX IPO is a much talked about IPO, not just because of the interest that BOX has managed to generate in its business, but also because the IPO has been delayed indefinitely.

BOX filed for an IPO way back in March 2014, and was expected to go public shortly thereafter. But for reasons speculated to range from market turbulence to difficult business environment, the BOX IPO hasn’t happened yet, and is now believed to be scheduled for 2015.

BOX, another cloud storage solutions provider, is more of a B2C business, in contrast to DropBox. The company raised another $150 million in its latest round of funding in July 2014, much after its initial IPO filing.

In total, Box has raised a similar amount of money, $564 million, but is valued at a much lower $2.4 billion, when compared to DropBox.

Box Revenue Growth & Profitability

Box updated its S-1 filing with the SEC in July 2014 to include its Q1 (Feb-April 2014) numbers.

Box Revenue Data - Box Revenue Chart

At last count, in Q1 2014, Box revenue grew by 94% YoY. For the FY ended Jan 2014, Box registered a revenue of $124 million. BOX has delivered solid growth rates, but it has also registered heavy losses throughout. In Q1 2014, BOX losses for the quarter stood at $38.5 million, with accumulated losses worth $399 million and debt worth $125 million.

Box Revenue 2014 Estimates

Assuming BOX revenue doubles in 2014 (FY ending Jan 2015), the company could have a full year revenue of about $250 million. Since BOX revenues have been nearly doubling on a YoY basis, this might not be a bad estimate.

Box Valuations

Based on BOX valuations following its last round of funding in July 2014, the company is valued at $2.4 billion, translating to a price to sales ratio of 9.6.

Our follow up article, part 2 of this series will be out shortly. Do feel free to write back to us for clarifications.

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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