Dropbox, Inc. (NASDAQ: $DBX) is a cloud storage and e-signature service that lets users store and access files across multiple devices. Users can upload their files to the cloud and organize them into folders for free or upgrade to a paid subscription for larger storage and more features.
On Thursday evening, May 9, 2024, Dropbox released its Q1 fiscal 2024 results to a positive market reception as revenue and profitability beat estimates.
Dropbox Delivers Stellar Q1 Results
For the first quarter, Dropbox reported a 3.3% Y/Y increase in revenue to $631.3 million, beating estimates of $628.67 million. GAAP net income rose 91.74% to $132.3 million from $69 million the previous year but missed estimates of $169.95 million.
On a non-GAAP basis, the net income increased 34.63% to $196.7 million for a non-GAAP EPS of $0.58, beating estimates of $0.50.
Cash from operations came in at $175.5 million, a 25.45% increase from the previous year, while free cash flow increased 20.51% Y/Y to $166.3 million. The cloud storage service ended the quarter with $1.176 billion in liquidity.
Q1 Financial Highlights
Dropbox saw a 1.5% increase in the number of paying users to 18.16 million, while the average revenue per user increased 0.45% to $139.59 compared to $138.97 the previous year.
Sequentially, paying users increased by 35,000 from the fourth quarter of fiscal 2023. In total, there are over 700 million registered users.
The company reported a 3.6% increase in total annual recurring revenue (ARR) to $2.556 billion compared to the same quarter last year and a 2.8% increase on an FX-neutral basis. Sequentially, the total ARR increased by $15.6 million.
Dropbox also saw an expansion in margins, with the GAAP gross margin rising to 83.2% compared to 80.9% the previous year, while non-GAAP gross margin rose to 84.6% compared to 82.4% the previous year.
The GAAP operating margin saw a significant increase to 22.7% compared to 13.8% the previous year, while the non-GAAP operating margin expanded to 36.5% compared to 28.6% the previous year.
Commenting on the results, CEO Drew Houston stated, “In Q1, our core business delivered in-line revenue and better than anticipated profitability.”
Dropbox Stock Performance
Following the Q1 beat, DBX shares rose 1.30% to $23.44 as of 1:15 PM EDT on Friday. At the close of trading, the stock was down 0.04%, closing at $23.13 . The stock is down 18.63% so far this year. Its biggest decline came in mid-February 2024 following the release of disappointing Q4 and FY23 results, which saw the stock lose 22.93% of its value.
Over the past 52 weeks, the stock is up 7.58%, underperforming the SPX, which has gained 26.43% in the same period. DBX stock is trading at a huge discount to its 52-week high of $33.43 and above its 52-week low of $21.70. It is currently below the 50 DMA and 200 DMA of $23.72 and $27.09, respectively.
Short interest in the stock has declined by 2.39% over the past month and now stands at 19.21 million shares. Short sellers hold 9.92% of the float and 5.68% of the shares outstanding.
The current trading volume is 4.5 million shares compared to an average three-month volume of 4.4 million, with a market cap of $7.927B.
Analysts’ Outlook on DBX Shares
Six stock analysts give Dropbox stock an overall hold rating. They forecast a broad range for the stock, with a high of $32 and a low of $24. Their average price forecast of $28.50 is a 21.35% upside based on the most recent price.
Is Dropbox a Buy?
Dropbox is off to a great start in 2024. Not only has its revenue grown, but it is also doing so efficiently, as evidenced by the growth in profitability. Additionally, the company is working to integrate AI into its services. Its results signal a company that is primed for growth and financial efficiency. Consequently, it could be a great addition to an investment portfolio with a medium-term horizon.
Click Here for Updates on Dropbox – It’s FREE to Sign Up for Text Message Notifications!
Disclaimer: This website provides information about cryptocurrency and stock market investments. This website does not provide investment advice and should not be used as a replacement for investment advice from a qualified professional. This website is for educational and informational purposes only. The owner of this website is not a registered investment advisor and does not offer investment advice. You, the reader / viewer, bear responsibility for your own investment decisions and should seek the advice of a qualified securities professional before making any investment.