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Dropbox IPO, Salesforce Alliance: Empowering Cloud Channel Partners?

Dropbox CEO Drew Houston

Dropbox is seeking to raise nearly $650 million in an IPO (Initial Public Offering) while also selling $100 million in stock to Salesforce’s venture capital arm, according to an SEC filing The move could put file sync and sharing cloud services back in the spotlight for channel partners, many of whom still don’t quite understand business opportunities and profit models associated with the platforms.

Within the SEC filing and associated IPO plan, the Dropbox disclosed:

  • Th company has more than 500 million registered users across 180 countries. Roughly 11 million users are paying customers. The system manages more than 400 billion pieces of content for customers, the SEC filing says.
  • Dropbox revenues surged to $1.1 billion in 2017, up from $844.8 million in 2016. The company’s net loss shrunk to $111.7 million, down from $210.2 million, according to the SEC filing.
  • On the partner front, Dropbox depends on an “open ecosystem” — with integrators to Google, Microsoft, Slack, Autodesk and other platform providers. More than 75% of Dropbox Business teams have linked to one or more third-party applications.

Dropbox: 90 Percent Direct Sales

Still, the company’s channel partner ecosystem — particularly revenue from VARs and resellers — is relatively small. The company had indicated back in 2016 that it wanted the channel to generate more than half of its sales within three years, according to CRN UK. Fast forward to 2018, and the company still  generates more than 90 percent of its revenues from self-serve channels — users who purchase a subscription through Dropbox’s app or website, the SEC filing discloses.

No doubt, Dropbox has a channel partner program — which is led by Global Channel Chief Eddie O’Brien. He was originally hired in 2016 to expand the company’s Fortune 5000 partner-led account base. His mission has since expanded to include large cloud partners that focus on SMB and midmarket partners, according to O’Brien’s LinkedIn profile.

Rivals like Box and MSP-centric players like Datto Autotask Workplace and eFolder Anchor also have partner programs. Box has momentum with big partners like IBM in the enterprise. Whole Datto and eFolder have niche MSP wins with Workplace and Anchor, respectively. Most of those wins, we suspect are bolt-on deals to existing MSP platform deployments rather than new, lucrative revenue drivers.

Progress Amid Slowing Growth?

There are signs of channel progress for file sync and sharing. BitTitan and Drobox partnered in mid-2017 on an MSP runbook marketplace effort. And HP Enterprise has touted momentum with Dropbox in the enterprise.

Still, the market is fiercely competitive and Wall Street is somewhat concerned about slowing growth. Box’s stock fell nearly 11 percent in late February 2018 after the company delivered weaker-than-expected revenue guidance for its fiscal Q1 2019. Also, Dropbox mentioned in its SEC filing that growth is slowing.

Amid those realities, we’ll be watching to see how the Dropbox partner program performs post-IPO.

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