Dropbox On A Rocky Road

Dropbox (Nasdaq: DBX) went public last year, but since then, it has had a tumultuous year. Despite beating analyst expectations on performance, its stock price has fallen. Today, the company is trading at nearly 5% lower than its list price. Analysts aren’t convinced that things will improve soon either.

Dropbox’s Financials

Dropbox’s recently reported second quarter revenues grew 18% to $401.5 million. Net loss grew to $ 21.4 million compared with a net loss of $4.1 million a year ago. On an adjusted basis, net income was $42 million or $0.10 per share. The market was looking for revenues of $401 million with an EPS of $0.09 for the quarter.

Among operating metrics, it reported 13.6 million subscribers at the end of June, ahead of the market’s expectations of 13.4 million subscribers. But the market was disappointed with the deceleration of Average Revenue per User (ARPU). For the quarter, ARPU grew to $120.48 from $116.66. But on a sequential basis, it declined from $121.4. This was the first time ever that Dropbox has witnessed a declining trend in ARPU, causing analysts to wonder how it will address the slowdown in the future. Analysts were also disappointed with the slowdown of billings and deferred revenue that came in at $410.4 million and $517.3 million, respectively, compared with the market’s expectations of billings of $420.3 million and deferred revenues of $527.7 million,

Dropbox expects to end the third quarter with revenues of $421-$424 million. It forecast the year’s revenues at $1.648-$1.654 billion. The market was looking for revenues of $1.64 billion for the year.

Dropbox’s Product Expansion

Dropbox has been expanding its product offerings through partnerships. It has entered into a strategic alliance with Atlassian to develop new integrations across the platforms of Dropbox and Atlassian. These integrations will be focused on building an environment that will allow teams to organize, coordinate, and run projects. Dropbox has been expanding its partner network. It already has several tie-ups with companies like Microsoft, Google, Salesforce, Adobe, and Zoom. These tie-ups have made it easier for its customers to work with files on the go.

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Sramana Mitra is the founder of One Million by One Million (1M/1M), a global virtual incubator that aims to help one million entrepreneurs ...

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