According to a recent research report, the global enterprise collaboration market is estimated to grow to $69.93 billion by 2024 at a CAGR of 15.23%. Remote working conditions will further accelerate this growth as organizations look to adopt collaboration tools for employee engagement, cost reduction, efficient project management, and knowledge management. Dropbox (Nasdaq: DBX) recently announced its first quarter results for the year where it reported its first ever net income for the quarter.

Dropbox’s Financials

Revenues for the first quarter grew 18% to $455 million, ahead of the market’s forecast of $452.2 million. Dropbox turned in profits for the first time since it went public. It reported a net income of $39.3 million compared with a net loss of $7.7 million a year ago. On an adjusted basis, net loss was $0.17 per share compared with the market’s expectations of $0.14 per share.

Among operating metrics, ARR was $1.864 billion, growing 16% over the year. Paying users grew from 13.2 million a year ago to 14.6 million and average revenue per paying user increased from $121.04 to $126.30.

The impressive quarter was a result of the cost control measures implemented in the previous quarters and the continued focus on adding paying customers.

For the second quarter, Dropbox forecast revenues of $463-$466 million with non-GAAP operating margin of 16.5%-17.5%. It expects to end the year with revenues of $1.88-$1.9 billion. Analysts estimate Dropbox to report revenues of $476.1 million for the quarter and $1.88 billion for the year.

Dropbox’s Product Upgrade

Dropbox has been focused on driving monetization and customer retention for its products. To implement this strategy, over the past few months, it has enhanced its mobile on-boarding flows for users who sign up for a Dropbox Plus trial. Based on the analytics by its data science team, it identified certain actions by mobile users in the first few weeks of their trial that were translating to a higher conversion rates. For instance, activities like sharing links to content were driving the transition. Actively changing their onboarding prompts to users on a trial to take these types of actions has helped drive higher levels of engagement and conversion.

Dropbox has also expanded its product offerings to align with the growing remote working requirements. For instance, in the quarter it added several features to its integration with Zoom so that users can now do more without leaving Dropbox. Users can now record a Zoom meeting and save it along with the transcript directly to Dropbox. They can also securely share the transcript and the recording with team members. Further, since the transcript files are indexed using the full-text search feature, these transcripts show up when users search for a phrase mentioned during the conference.

They also released several improvements to the admin experience. It introduced an updated dashboard that is now part of the Dropbox Business admin console and allows IT teams to easily review user activity and take action as needed. Admins can see which outside domains are being shared and how frequently and can also check on compliance.

It launched new admin and security features into HelloSign to allow customers to streamline multi-team management by providing them with better visibility and delegation controls. Users now have oversight over documents, templates, branding, and usage.

Dropbox offers SDKs for several popular programming languages along with several pre-built components to allow developers to build applications on its platform. They can leverage APIs to build custom solutions as well. The integration with Zoom is a very relevant use case in current times. Dropbox has similar integrations with other collaboration services like Atlassian and Slack where it is helping bring user content into context. As I mentioned earlier, Dropbox should open up about its API usage statistics to help investors understand their platform strategy better.

Its stock is trading at $20.66 with a market capitalization of $8.54 billion. It hit a 52-week high of $25.72 nearly a year ago. It had fallen to a 52-week low of $14.55 in December last year.