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Your Scenario: (25M * 100% paying* $120/customer * 50% margin)/$10BN= <10 PE Ratio An extremely good deal by any measure. Alternate Scenario 1: (25M * 10% payi

by nrao123 15y ago

Your Scenario: (25M * 100% paying* $120/customer * 50% margin)/$10BN= <10 PE Ratio An extremely good deal by any measure. Alternate Scenario 1: (25M * 10% paying* $120/customer * 50% margin)/$10BN=66 PE Alternate Scenario 2: (25M * 10% paying* $200/customer * 50% margin)/$10BN=40 PE Alternate Scenario 3: (25M * 20% paying* $200/customer * 50% margin)/$10BN=20 PE Btw- I have heard Dropbox has 20%conversion rates so scenario 3 is not that outlandish. Another way to look at it- if you bought a stalwart tech company (Google/MS/EMC etc) at 66 PE multiple (Scenario 1) at IPO stage- you would have made money 2-3 years from then. Question - how wide is Dropbox economic moat? Or more simply how low are Switching costs? I have been analyzing internet companies sometime now for overvaluation and I don't Dropbox (from an outside in looking perspective) is overvalued.

kcg 15y ago
I'd be amazed if Dropbox had a 50% profit (net income) margin. It's likely that their gross margin is around there, but you still have to subtract SG&A and other expenses to get down to net income. If Dropbox pulls in $100 million in revenue this year, a $10 billion valuation is 100x revenue. That is a very high multiple.