Dropbox’s Stock Jumps as Company Exceeds Q1 Earnings and Revenue Estimates

Dropbox earned $385.6 Mn in revenue and achieved adjusted earnings of $0.10 per share in the first quarter of 2019.

America file hosting service provider, Dropbox reported its more-than-expected earnings and revenue for the first quarter of fiscal 2019. After the company announced first quarter results that beat estimates, its stock climbed up 8% during the extended session of the day. Up from the year-ago quarter’s $0.08 per share, adjusted earnings reached $0.10 per share during the first quarter. Analysts had expected the company to post adjusted earnings of $0.07 per share. During the first quarter of 2018, the company incurred a loss of $2.13 per share or $465.5 Mn. For the first quarter 2019, a net loss of $0.02 per share or $7.7 Mn was reported.

Dropbox achieved revenue that surpassed analysts’ expectation of $381.6 Mn for the first quarter 2019. According to its report, revenue increased 22% from last year’s first quarter.

Q1 2019 Revenue: $385.6 Mn

Q1 2019 Adjusted Earnings: $0.10 per share

Q1 2019 GAAP Gross Margin: 74.5% versus 61.9% in Q1 2018

Q1 2019 Net Cash from Operating Activities: $63.2 Mn versus $61.8 Mn in Q1 2018

Q1 2019 Free Cash Flow: $33.5 Mn versus $51.9 Mn in Q1 2018

In comparison with year-ago quarter’s $114.30, average revenue per paying user reached $121.04. During the last year’s first quarter, the number of paying users were 11.5 Mn. In the first quarter 2019, it increased 15% to 13.2 Mn, including 0.1 Mn incremental paying users from Dropbox’s $230 Mn acquisition of e-signature software company HelloSign in January. Analysts had expected the number to reach 13 Mn.

“Driven by continued average revenue per user expansion and paying user growth, Dropbox kicked off 2019 with a strong first quarter. Our efficient operational discipline and go-to-market strategy are reflected by our robust operating margins and 22% topline growth,” said Drew Houston, Co-founder and CEO of Dropbox (source).

According to Ajay Vashee, CFO of Dropbox, new paying users opting for the company’s premium advanced and professional plans drove the average revenue per user expansion in the first quarter 2019.

“We continue to ship product experiences that place our company at the center of the workflows of our users and have achieved a scale that few SaaS businesses have reached. Dropbox also closed its first acquisition as a public company with HelloSign, and I am thrilled about our future together,” said Houston (source).

It appears Dropbox’s management is taking a balanced approach toward expansion, considering its debt control and maintenance of strong liquidity. The company is able to control its debt despite strong investments in buyouts and growth initiatives.