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Cloud Stocks: Dropbox Needs to Share API Metrics

Posted on Friday, Apr 17th 2020

As per a Market and Market report, the Enterprise Collaboration Market is expected to grow at 9% CAGR to $48.1 billion by 2024. The current socially distanced world will most likely accelerate this growth for the current year as organizations migrate to virtual offices for their workforce. Dropbox (Nasdaq: DBX) is a leading player in this space that is likely to benefit.

Dropbox’s Financials

For the fourth quarter, its revenues grew 19% to $446 million, ahead of the market’s forecast of $443 million. GAAP net loss was $6.6 million, or $0.02 a share, compared with net loss of $9.5 million, or $0.02 a share a year ago. On an adjusted basis, net income was $0.16 per share compared to $0.10 a year ago. The market was looking for an EPS of $0.14.

Among operating metrics, annual recurring revenue grew 19% to $1.82 billion. Paying users grew from 12.7 million a year ago to 14.3 million at the end of the year. Analysts had expected 14.2 million subscribers for the period. Average revenue per paying user grew from $119.61 million a year ago to $125.

Dropbox ended the year with revenues growing 19% to $1.661 billion. GAAP net loss of $52.7 million was significantly better than the net loss of $484.9 million a year ago. Adjusted net income per share was $0.50 compared to $0.41 in the prior year.

For the first quarter, Dropbox forecast revenues of $452-$454 million with non-GAAP operating margin of 13.5%-14%. It expects to end the year with revenues of $1.89-$1.91 billion. Analysts estimate Dropbox to report revenues of $449.2 million for the quarter with an EPS of $0.12 and revenues of $1.9 billion for the year with an EPS of $0.57.

Dropbox’s Product Expansion

During the last year, Dropbox has continued to expand its product offering. Last quarter, it announced a new desktop app that allows users to organize all their cloud content including Google Docs. It is also well integrated with other enterprise solutions such as Slack and Zoom. Dropbox leverages machine intelligence capabilities to showcase to users the work that is important to them when they need it. It transforms traditional shared folders into a connect workspace for all cloud content. The company is seeing strong traction for this Desktop app. It claims to be adding “Millions of users” to this new desktop experience on a weekly basis.

Dropbox continued to expand its partnerships with other tech players. It built new integrations to ensure the apps that the customers use at work are a part of the Dropbox experience. It built deep integration into offerings from strategic partners like Atlassian, Slack, and Zoom to help bring users content into context. Dropbox believes that users who have adopted these deep integrations are more likely to convert to its paid plans and will more likely be more collaborative and engaged. It recently also announced a partnership with BetterCloud that gives admins the tools needed to manage and secure the SaaS environment. BetterCloud allows businesses to enforce custom security policies, scan content for sensitive data, and automate critical processes.

Dropbox allows developers to develop applications on its platform. It offers official SDKs for several popular programming languages along with several pre-built components. Developers can leverage these APIs to build custom solutions to improve collaboration, streamline workflows, and secure content. Dropbox does not share a lot of detail about its API usage statistics. I would like to see the results it is getting there to understand its platform strategy.

Its stock is trading at $19 with a market capitalization of $8.2 billion. It had climbed to a 52-week high of $26.20 in July last year. It had fallen to a 52-week low of $16.08 in December last year.

This segment is a part in the series : Cloud Stocks


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