Dropbox (DBX) is scheduled to release first-quarter 2025 results on May 8.DBX expects first-quarter 2025 revenues between $618 million and $621 million. The Zacks Consensus Estimate for first-quarter revenues is pegged at $619.06 million, indicating a year-over-year decline of 1.94%.The consensus mark for earnings is pegged at 62 cents per share and remains unchanged over the past 30 days. The figure indicates a 6.9% increase from the year-ago quarter’s reported figure. DBX’s earnings beat the Zacks Consens ...

Dropbox’s chief customer officer, Eric Cox, plans to step down, according to a document filed with the SEC on Friday. Cox will remain in his current role for “a period of time” to help with the transition, per the filing, and then will continue as a “non-executive” employee through mid-August.Dropbox didn’t immediately respond to a request for comment. Cox joined Dropbox in November 2023 from Vimeo, where he was the COO overseeing sales, customer success, data, strategy, and operations. Prior to that, Cox ...

Company Performance - Dropbox (DBX) closed at $27.24, with a +0.41% change from the previous day, outperforming the S&P 500's gain of 0.16% [1] - Over the past month, Dropbox shares gained 3.31%, while the Computer and Technology sector lost 5.94% and the S&P 500 lost 3.59% [1] Earnings Projections - Dropbox is projected to report earnings of $0.62 per share, reflecting a year-over-year growth of 6.9%, with quarterly revenue estimated at $619.06 million, down 1.94% from the previous year [2] - For the full year, earnings are estimated at $2.54 per share and revenue at $2.47 billion, showing changes of +2.01% and -2.9% respectively from the prior year [3] Analyst Estimates - Recent changes to analyst estimates for Dropbox indicate short-term business trends, with upward revisions suggesting analysts' positive outlook on the company's operations [4] - The Zacks Rank system, which incorporates estimate changes, currently ranks Dropbox as 1 (Strong Buy), indicating strong potential for stock performance [6] Valuation Metrics - Dropbox has a Forward P/E ratio of 10.67, significantly lower than the industry average of 20.69, suggesting it is trading at a discount [7] - The PEG ratio for Dropbox is 0.93, compared to the industry average of 1.35, indicating favorable valuation relative to expected earnings growth [7] Industry Context - The Internet - Services industry, part of the Computer and Technology sector, holds a Zacks Industry Rank of 151, placing it in the bottom 40% of over 250 industries [8] - Historical data shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Core Viewpoint - Dropbox (DBX) has faced challenges in revenue growth and competition, leading to an 11.8% decline in shares year to date, underperforming the broader technology sector and internet services industry [1] Group 1: Financial Performance - In the fourth quarter of 2024, Dropbox reported a year-over-year revenue growth of only 1.4%, indicating difficulties in expanding its customer base [1] - The average revenue per paying user (ARPU) increased to $140.23 from $139.38 in the previous year, reflecting successful monetization strategies [8] - The Zacks Consensus Estimate for first-quarter 2025 earnings is 62 cents, showing a 6.90% growth from the previous year, while the estimate for 2025 earnings is $2.54 per share, indicating a year-over-year growth of 2.01% [9] Group 2: User Base and Market Position - As of the fourth quarter of 2024, Dropbox reported 18.22 million paying users, demonstrating a steady increase and highlighting the company's ability to attract and retain customers [7] - Dropbox holds a 20.9% market share in the $11.6 billion content-sharing and collaboration applications market, positioning it as a leader in this sector [4] Group 3: Product Development and Innovation - Dropbox is expanding its AI-powered solutions and enterprise-focused services, which are expected to enhance platform value and drive user adoption [2] - The successful launch of Dropbox Dash, a universal search tool, received positive customer feedback and exceeded sales goals in the fourth quarter of 2024 [5] - Dropbox Sign and DocSend enhance secure document management and sharing capabilities, driving user adoption and increasing enterprise engagement [6] Group 4: Competitive Landscape - Despite Dropbox's challenges, it has outperformed peers like Akamai Technologies, Sprout Social, and Inuvo, which have seen declines of 15.3%, 18.1%, and 32.6% year to date, respectively [3][2]

Company Performance - Dropbox's stock closed at $26.39, reflecting a +0.42% change from the previous session, outperforming the S&P 500's daily loss of 1.07% [1] - Over the past month, Dropbox shares have decreased by 19.83, while the Computer and Technology sector and the S&P 500 have lost 11.12% and 7.03%, respectively [1] Earnings Forecast - The upcoming earnings report for Dropbox is anticipated to show an EPS of $0.62, representing a 6.9% growth compared to the same quarter last year [2] - Revenue is expected to be $619.06 million, indicating a 1.94% decline from the year-ago quarter [2] Annual Estimates - For the entire year, the Zacks Consensus Estimates predict earnings of $2.54 per share and revenue of $2.47 billion, reflecting changes of +2.01% and -2.9% compared to the previous year [3] Analyst Projections - Recent shifts in analyst projections for Dropbox are important as they indicate changing near-term business trends, with positive revisions suggesting analysts' confidence in the company's performance [4] Stock Performance Correlation - Research indicates that adjustments in earnings estimates are directly linked to imminent stock price performance, with the Zacks Rank model providing actionable ratings based on these changes [5] Zacks Rank - Dropbox currently holds a Zacks Rank of 1 (Strong Buy), with the consensus EPS estimate having increased by 6.09% over the last 30 days [6] Valuation Metrics - Dropbox is trading at a Forward P/E ratio of 10.34, significantly lower than the industry average of 21.64, indicating a discount [7] - The company's PEG ratio is 0.9, compared to the industry average of 1.34, suggesting favorable valuation relative to expected earnings growth [7] Industry Context - The Internet - Services industry, part of the Computer and Technology sector, has a Zacks Industry Rank of 159, placing it in the bottom 37% of over 250 industries [8] - The top 50% rated industries tend to outperform the bottom half by a factor of 2 to 1 [8]

Core Insights - The article emphasizes the importance of liquidity in a company's ability to meet debt obligations and drive business growth, suggesting that investors consider adding stocks with high liquidity to their portfolios for better returns [1][2]. Group 1: Liquidity Measures - Current Ratio: Measures current assets against current liabilities, with a ratio below 1 indicating more liabilities than assets. An ideal range is between 1 and 3 [3]. - Quick Ratio: Indicates a company's ability to pay short-term obligations, with a desirable ratio of more than 1 [4]. - Cash Ratio: The most conservative measure, focusing on cash and cash equivalents relative to current liabilities. A ratio greater than 1 is desirable but may indicate inefficiency [5]. Group 2: Screening Parameters for Liquid Stocks - Asset Utilization: A measure of efficiency, calculated as total sales over the last 12 months divided by the average total assets over the last four quarters. Companies with a ratio higher than their industry average are considered efficient [6]. - Growth Score: A proprietary metric added to ensure that liquid and efficient stocks have solid growth potential, with a Growth Score of A or B indicating better performance [7][8]. Group 3: Top Liquid Stocks - Dropbox, Inc. (DBX): Reported Q4 2024 non-GAAP earnings of 73 cents per share, exceeding estimates by 17.74% and showing a 46% year-over-year increase. Revenues reached $643.6 million, up 1.4% year over year [9][10][11]. - Ubiquiti Inc. (UI): Achieved net sales of $599.9 million in Q2 fiscal 2025, up from $465 million year over year, with a Growth Score of A [12][14]. - EverQuote, Inc. (EVER): Total revenues of $147.5 million increased 164.8% year over year, with automotive insurance revenues rising 200% year over year [15][17][18]. - Moelis & Company (MC): Reported adjusted earnings of $1.18 per share in Q4 2024, significantly beating estimates, with total revenues of $438.7 million [19][20][21].

User Base and Revenue Generation - As of December 31, 2024, the company served over 700 million registered users but only 18.22 million paying users, indicating a significant conversion challenge [100]. - The company generates more than 90% of its revenue from self-serve channels, highlighting the importance of user satisfaction and word-of-mouth referrals for growth [98]. - The company generates revenue primarily from subscription sales, making widespread acceptance of content collaboration solutions critical for future growth [131]. - More than 90% of the company's revenue is generated from self-serve channels, indicating a lack of significant outbound sales force [142]. - The company recorded net foreign currency transaction losses of $3.2 million during the year ended December 31, 2023, while gains and losses were immaterial for 2024 [405]. User Growth Challenges - The growth rate of paying users has declined, and the company anticipates potential negative growth in the near term if new product initiatives do not succeed [110]. - Macroeconomic factors, such as inflation and layoffs, have previously impacted users' technology spending, which may restrict the company's ability to attract new paying users [102]. - The company has experienced fluctuations in paying user renewals and upgrades, which could adversely affect future revenue growth [95]. - The shift towards more customers opting for monthly plans rather than annual plans may lead to fluctuations in subscription renewals [97]. - Pricing sensitivity affects user acquisition and conversion rates, with competitors potentially offering lower-priced alternatives [121]. Operational and Security Risks - The company has faced privacy and data security breaches, which could harm its reputation and customer relationships, potentially affecting revenue [103]. - The company relies on third-party vendors for infrastructure, exposing it to additional security risks that could impact user data [106]. - The company has incorporated AI technologies into its products, which may create additional cybersecurity risks and affect user trust [103]. - The company may incur significant costs and face service interruptions if it cannot renew agreements with datacenters and service providers [152]. - The reliance on third-party software and services poses risks, including potential errors that could harm the platform and business [153]. Financial Performance and Management - Revenue for the year ended December 31, 2024, was $2,548.2 million, a 1.9% increase from $2,501.6 million in 2023 [435]. - Gross profit increased to $2,103.1 million in 2024, up from $2,023.1 million in 2023, reflecting a gross margin improvement [435]. - Total operating expenses for 2024 were $1,616.9 million, compared to $1,484.4 million in 2023, representing an increase of 8.9% [435]. - Net income for 2024 was $452.3 million, slightly down from $453.6 million in 2023, resulting in a basic net income per share of $1.42 [435]. - The company has $1,088.6 million in commitments to settle contractual obligations as of December 31, 2024 [176]. Competitive Landscape - The company operates in a competitive market with significant pressure from larger competitors like Microsoft and Amazon, which may impact its market position [118]. - The company is experiencing intense competition for attracting and retaining highly qualified personnel, which may affect its growth prospects [136]. - The company anticipates that expanding sales to large organizations may lengthen sales cycles and introduce deployment challenges [143]. - Revenue growth rates have declined in recent periods, potentially due to increased competition and market saturation [179]. Regulatory and Compliance Issues - The company faces regulatory uncertainty regarding data transfers from the EEA, UK, and Switzerland to the U.S., which may require additional safeguards and increase costs [207]. - The California Consumer Privacy Act (CCPA) and the California Privacy Rights Act (CPRA) have imposed expanded privacy protections, leading to increased compliance costs [208]. - The Digital Services Act (DSA) in the EU includes fines of up to 6% of annual turnover for non-compliance, potentially impacting business operations [210]. - The company may incur significant costs due to compliance with various privacy and data protection laws, which could limit the adoption and demand for its services [212]. Corporate Governance and Shareholder Matters - As of December 31, 2024, the company's directors and executive officers held 77.5% of the voting power of its capital stock, with one individual holding approximately 77.4% [223]. - The company plans to reincorporate from Delaware to Nevada, with the expected transition occurring in March 2025 [233]. - The multi-class stock structure allows holders of Class B common stock to control a majority of the voting power, potentially limiting influence from other shareholders [223]. - Future sales of Class A common stock could depress its market price, particularly if those sales are by officers and directors [226]. - The company announced a stock repurchase program with an authorization for repurchase of up to an additional $1.2 billion of Class A common stock, totaling approximately $4.0 billion repurchased since 2020 [239]. Financial Position and Assets - The total assets of the company increased to $3,325.2 million as of December 31, 2024, compared to $2,983.5 million in 2023, reflecting a growth of approximately 11.5% [432]. - Cash and cash equivalents rose significantly to $1,328.3 million in 2024 from $614.9 million in 2023, marking an increase of approximately 116.5% [432]. - The company's total liabilities increased to $4,077.6 million in 2024 from $3,149.3 million in 2023, representing a rise of about 29.4% [432]. - The accumulated deficit grew to $(3,146.5) million in 2024 from $(2,742.3) million in 2023, indicating an increase of approximately 14.7% [432]. - The company's deferred revenue was $727.7 million as of December 31, 2024, slightly up from $725.0 million in 2023 [432].

Core Insights - Dropbox (DBX) reported fourth-quarter 2024 non-GAAP earnings of 73 cents per share, exceeding the Zacks Consensus Estimate by 17.74% and marking a 46% increase year over year [1] - The company experienced a revenue increase of 1.4% year over year, totaling $643.6 million, which also surpassed the consensus estimate by 0.79% [2] - Dropbox's total annual recurring revenues reached $2.574 billion, reflecting a 2% year-over-year growth [2] Financial Performance - DBX's earnings have consistently beaten the Zacks Consensus Estimate over the past four quarters, with an average earnings surprise of 13.33% [2] - The company reported a non-GAAP gross margin of 83.1%, up 80 basis points year over year, and a non-GAAP operating margin of 36.9%, which is an increase of 470 basis points year over year [5] - Research and development expenses decreased by 10.4% year over year to $142.4 million, while sales and marketing expenses fell by 3.8% to $106.9 million [5] User Metrics - As of the end of the fourth quarter, Dropbox had 18.22 million paying users, a slight sequential decline of approximately 15,000 users [4] - The average revenue per paying user (ARPU) increased to $140.06 from $138.83 in the same quarter last year, driven by higher-priced offerings and favorable foreign exchange trends [4] Cash Flow and Share Repurchase - As of December 31, 2024, Dropbox had cash, cash equivalents, and short-term investments totaling $1.59 billion, a significant increase from $890.8 million as of September 30, 2024 [6] - The company generated $213.8 million in cash from operating activities during the quarter and reported free cash flow of $210.5 million [6] - Dropbox repurchased 12.5 million shares for $350.4 million, with $1.4 billion remaining under existing share repurchase authorizations [7] Guidance - For the first quarter of 2025, Dropbox expects revenues between $618 million and $621 million, with a non-GAAP operating margin projected at 38.5% [9] - For the full year 2025, the company anticipates revenues between $2.465 billion and $2.480 billion [9] - The expected gross margin for the year is 82%, with a non-GAAP operating margin forecasted between 37.5% and 38% [10]

Financial Data and Key Metrics Changes - Total revenue for Q4 increased 1.4% year-over-year to $644 million, with foreign exchange rates contributing $2 million to revenue [32] - Total ARR grew to $2.574 billion, up 2% year-over-year, driven largely by strength in individual plans [32][33] - Net income for Q4 was $223 million, up 30% year-over-year, attributed to lower operating expenses following a reduction in force [37] - Diluted EPS for Q4 was $0.73, representing a 46% year-over-year increase [38] - Free cash flow for the quarter was $211 million, a 24% year-over-year increase [40] Business Line Data and Key Metrics Changes - Gross additions for Teams SKUs were up 10% year-over-year, but elevated churn and downsell pressure offset these gains [10][11] - The relaunched IT admin console improved admin engagement and CSAT scores, crucial for purchase decision-making [11] - The individual plans, particularly Essentials, Plus, and the new lower-priced Dropbox Simple plan, showed relative strength [11] Market Data and Key Metrics Changes - The U.S. dollar has strengthened, impacting revenue and free cash flow expectations for 2025 [46] - FormSwift is expected to serve as a headwind to revenue growth, contributing to a decline in paying users [45][50] Company Strategy and Development Direction - The company aims to scale Dash, focusing on marketing investments and building a sales pipeline [18] - Simplifying and strengthening the core business while enhancing operating efficiency is a priority [20] - The company plans to leverage its FSS business as a launchpad for Dash, integrating both experiences [26] - The transition from traditional file sync and share to AI-powered universal search and content intelligence is a key strategic focus [27] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges of transitioning to new business models while maintaining a focus on long-term growth [28] - The company is optimistic about the potential of Dash, viewing it as a natural evolution of its existing services [67] - Management expects continued pressure on the Teams business but sees opportunities for optimization and growth in Dash [85][90] Other Important Information - The company repurchased approximately 12.5 million shares in Q4, spending about $350 million [42] - A new $1.2 billion share repurchase program has been authorized to reduce share counts [41] Q&A Session Summary Question: Insights on Dash's uptake and competition - Management expressed confidence in Dash's potential, citing a large market opportunity and positive customer reception [66][70] Question: Clarification on new profitability metrics - The focus on unlevered free cash flow aligns with core operating performance, while adjusted EBITDA provides additional insights [76][77] Question: Growth outlook and headwinds - Management noted that headwinds are stable, with voluntary choices to cut inefficient growth impacting short-term results [83][85] Question: Competitive dynamics for Dash - Management highlighted advantages over competitors, including an existing customer base and strong security features [102][105] Question: Future AI product portfolio extensions - Management indicated potential for natural adjacencies from Dash, with ongoing evaluations for in-house development and acquisitions [111][114]

Financial Results & Investor Presentation Q4 2024 1 Safe Harbor Statement This presentation contains forward-looking statements. These statements may relate to, but are not limited to, plans for growth, technological capabilities and new features and products and the long-term financial targets of Dropbox, Inc. ("Dropbox," "we," "us," or similar terms), as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be pred ...