Dropbox upsizes convertible notes offering to $1.1B

Dropbox Inc. successfully issued $1.1 billion in convertible senior notes due in 2031 through a private placement with qualified institutional buyers, as reported in a press release. The offering exceeded the initially announced $1.0 billion amount. Initial buyers were granted a 13-day option to purchase up to an additional $150 million in notes.

The notes mature on December 1, 2031, and the company anticipates net proceeds of approximately $1.082 billion, or $1.230 billion if the option is fully utilized. These notes carry an annual interest rate of 1.25%, paid semi-annually starting June 1, 2027. They can be converted at an initial rate of 24.5549 shares of Dropbox's Class A common stock for each $1,000 principal amount, equivalent to a conversion price of around $40.73 per share, which is 25% higher than the stock's closing price on November 9, 2026.

Dropbox plans to allocate the net proceeds, with roughly $103.1 million utilized for convertible note hedge transactions, around $175.0 million to repurchase Class A common stock shares from institutional investors at the November 9 closing price, and the remaining funds, combined with existing cash reserves, to pay off at least $750 million in outstanding borrowings from its term loan facility.

The notes cannot be redeemed before December 5, 2029, except for a cleanup redemption if the outstanding principal falls below $100 million. After this date, Dropbox may redeem the notes if its Class A common stock price reaches at least 130% of the conversion price for 20 consecutive trading days within any 30-day period. Dropbox also entered into convertible note hedge and warrant transactions with the initial purchasers and other financial institutions.

The warrant strike price begins at approximately $57.02 per share, representing a 75% premium over the November 9, 2026 closing price.