Dropbox may have kicked off a unicorn stampede. Last week’s filing sets it up for a $500 million IPO that can come as early as March 22. Privately valued at $10 billion, the cloud storage company will be the year’s first “decacorn” to go public.
It’s a major milestone. The number of pre-IPO decacorns has swelled from 9 to 19 over the past three years. If the Dropbox IPO pops, that could finally nudge a string of highly-valued startups to go public. If it disappoints like March 2017 decacorn IPO Snap, they may continue to sit on the sidelines.
In addition to Dropbox, Spotify and Lyft look ready to list in 2018, as do a number of large Chinese companies like Meituan-Dianping and Tencent Music. Other high-profile names like Uber, Airbnb, Pinterest, and SpaceX have indicated that IPOs are in 2019 or beyond. Below we present the most notable takeaways from recent news on the decacorn class.
Renaissance Capital's Private Company Watchlist and Global IPO Pipeline contain all the decacorns (only on IPO Intelligence).
| Decacorns That Could List in 2018 | |||
|---|---|---|---|
| Issuer Business |
Private Valuation | Est. Annual Sales | Est. IPO Timing |
| Dropbox | $10.0B | $1.1B | March 2018 |
| Web-based cloud storage provider | |||
| Spotify | $19.0B | $5.0B | March-April 2018 |
| Subscription-based music streaming service. | |||
| Lyft | $11.5B | $1.0B | 2018 |
| On-demand transportation app where customers can summon a driver. | |||
| Meituan-Dianping | $30.0B | >$1.0B | 2018 |
| Chinese group buying and review platform for local businesses. | |||
| Tencent Music | $10.0B | >$1.0B | 2018 |
| Chinese online music-streaming service. | |||
| Xiaomi | $50.0B | >$12.5B | 2018 |
| World's third-largest smartphone supplier. | |||
| Lufax | $60.0B | >$1.0B | 2018 |
| Chinese peer-to-peer lender backed by Ping An Insurance. | |||
Try a free trial today.
Dropbox
Valued at $10 billion in January 2014, Dropbox (DBX) can launch its IPO roadshow on Monday, March 12 ahead of a listing in the following week. In 2017, the cloud-storage company hit $1.1 billion in revenue with 31% annual growth. While it is still highly unprofitable and carries an eye-popping $1.0 billion accumulated deficit, Dropbox produced $240 million in free cash flow during 2017.
Spotify
Privately trading at a valuation of more than $17 billion, Spotify (SPTF.RC) could go public shortly after Dropbox, with rumors of a direct listing as early as March. The SEC approved that process for the NYSE in February, following Spotify's reported confidential filing in January. The world's largest paid music service, Spotify was reportedly on track for roughly $5 billion in revenue in 2017, up 40% from the prior year.
Lyft
Lyft (LYFT.RC) became an $11.5 billion decacorn in the 4Q17 when Alphabet's CapitalG led a $1.5 billion round. That was after a May 2017 capital raise that the CFO called a "pre-IPO round." A 2018 IPO appears likely. In October, news broke that the ride-sharing company was interviewing IPO investment banks. It recently hired a COO from Tesla and a VP of Investor Relations. Lyft also has the wind at its back: Uber's missteps in 2017 helped Lyft double its annual rides to 375 million.
Chinese decacorns
While the Hong Kong Exchange’s new listing policy may steal some big tech IPOs from New York, one thing seems certain: The Chinese decacorns are coming. Meituan-Dianping (MEIT.RC), regarded by some as the Yelp-and-Groupon of China with revenue reportedly in the billions, raised $4 billion in October 2017 at a $30 billion valuation, and news broke one month later that it was planning to raise $3 billion in a 2018 US IPO. Valued at $10 billion, Tencent Music (CMSC.RC) plans to raise $1 billion in New York or Hong Kong this year, according to anonymous sources; while Spotify holds the global crown, Tencent Music dominates China with roughly 60% of China’s online music market. Smartphone company Xiaomi (XIAO.RC) is reportedly targeting a Hong Kong IPO in the second half of the year that would value it at $50 billion. Peer-to-peer financial lender Lufax (LFAX.RC) is also targeting a Hong Kong IPO in 2018, with an estimated $60 billion valuation.
Although falling slightly short of the $10 billion threshold, iQIYI (IQ) will provide a litmus test for other large Chinese tech companies; the company filed for an estimated $1.5 billion US IPO today that could launch on March 14.
| IPO on hold: Decacorns targeting 2019 and beyond | |||
|---|---|---|---|
| Issuer Business |
Private Valuation | Est. Annual Sales | Est. IPO Timing |
| Uber | $69.0B | $7.4B | 2019 |
| On-demand transportation service. |
|||
| Airbnb | $31.0B | $2.6B | 2019 |
| Provides a global network of accommodations offered by locals. | |||
| $12.3B | $500M | 2019 | |
| Operates a pinboard-style social photo sharing website. | |||
| SpaceX | $21.0B | $2.0B | 2019-2020 |
| Space exploration company with the Falcon line of spacecraft. | |||
Uber
After a tumultuous year, Uber (UBER.RC) CEO Dara Khosrowshahi stated in November that the firm is targeting a 2019 IPO. More recently, the company appointed a COO in December, raised $1.25 billion in fresh capital from Softbank at a $69 billion valuation (it bought more shares from insiders at a $48 billion), settled a lawsuit with Waymo, and saw its 4Q17 sales rise to $2.3 billion with a $1.1 billion loss.
Airbnb
Valued at $31 billion, Airbnb (AIRBN.RC) is the second-largest name in our PCW behind Uber. Last year, CEO Brian Chesky implied that Airbnb would be ready for an IPO in 2018. In February, however, CFO Laurence Tosi left the company. Chesky stated that he would not take the company public in 2018, but that it plans to complete IPO preparations by year-end.
In the decacorn club since 2015, Pinterest (PIN.RC) was last valued at $12 billion in mid-2017. IPO rumors have been swirling since 2016 when it hired its first CFO, and since then it has made several other key hires. However, The Information reported in December 2017 that Pinterest’s full-year revenue of $490 million (+64% YoY) came up short of its $500 million target, and that an IPO was now expected in 2019.
SpaceX
SpaceX’s (SPACE.RC) private valuation rocketed to $21 billion in 2017 from about $10 billion two years ago. Elon Musk’s space exploration company generated viral media buzz after it launched its Falcon Heavy rocket in February. Musk has denied that he is working on an IPO, making 2018 unlikely, but that would be a logical next step following last year's Series H round.
