![]() There are many strategic investors like Adobe and private equity investors who might be very interested at this price. However, as we said above, having an activist involved often puts a company in pseudo-play, especially a technology company with 700 million users and only a $12 billion market cap. ![]() This is the best path for value creation and Elliott is very likely working with management amicably to accomplish this. ![]() Even if this turns away some current users who refuse to pay, that does not cost the company any revenue, and, in fact, saves them costs of storing data for free. If they were able to get $1 per month from an additional 10% of their user base, that would translate to $840 million of additional annual revenue, all of which would go directly to the bottom line at a company that right now has only $300 million of EBITDA. Dropbox is a very sticky product and there is tremendous opportunity to patiently and gradually convert non-paying users to paying users by decreasing data limit for free users or charging minimal amounts for other Dropbox services, such as password management, secured file storage services or adding more functionality behind the paywall. Some 685 million users use it for free despite having a variety of personal and business subscription plans. The company has 700 million users, but only 15 million (2.1%) are paying clients. While margin improvement and the sale of the company could certainly create value for shareholders, the real opportunity is to better monetize the user base. There is also a secondary plan to sell the company that always looms in an activist campaign, particularly when Elliott is involved in a technology company. However, with Elliott involved, we expect those things to be done at a faster pace. That is not what is going on here because management is already doing all of that. The typical activist play is to urge the company to improve margins, use cash to buy back stock, and cut costs.
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