News

Dropbox Shares Drop 11% After Earnings

SAN FRANCISCO — Dropbox (NASDAQ: DBX) shares dropped over 11% in after hours trading Thursday after announcing financial results for its fourth quarter and fiscal year ended December 31, 2018.

The company reported revenues for the fourth quarter up 23% from a year ago. Dropbox said it has over 500 million registered users for its online storage platform and 12.7 million paying customers.

“We ended our incredible first year as a public company with a great Q4,” said Dropbox Co-founder and Chief Executive Officer Drew Houston. “Our healthy top line growth and free cash flow generation reflect our strong business model, and our new product updates and integrations, like Dropbox Extensions, put Dropbox at the center of our users’ workflows and helped us close out the year with over 400,000 business teams. We kicked off 2019 with our acquisition of HelloSign, which extends the capabilities of our platform and solves even more problems for our users. I’m excited for the road ahead and looking forward to another great year.”

Fourth Quarter Fiscal 2018 Results

  • Total revenue was $375.9 million, an increase of 23% from the same period last year.
  • Paying users totaled 12.7 million, as compared to 11.0 million for the same period last year. Average revenue per paying user was $119.61, as compared to $113.39 for the same period last year.
  • GAAP gross margin was 74.9%, as compared to 70.0% in the same period last year. Non-GAAP gross margin was 75.7%, as compared to 70.9% in the same period last year.
  • GAAP operating margin was (3.2%), as compared to (12.2%) in the same period last year. Non-GAAP operating margin was 11.0%, as compared to 3.3% in the same period last year.
  • GAAP net loss was ($9.5) million, as compared to ($37.7) million in the same period last year. Non-GAAP net income was $42.3 million, as compared to $11.2 million in the same period last year.
  • Net cash provided by operating activities was $123.7 million, as compared to $71.1 million in the same period last year. Free cash flow was $88.3 million, as compared to $57.8 million in the same period last year.
  • GAAP basic and diluted net loss per share was ($0.02), as compared to ($0.19) in the same period last year. Non-GAAP diluted net income per share was $0.10, as compared to $0.03 in the same period last year. (1)
  • Cash, cash equivalents and short-term investments were $1,089.3 million at the end of the fourth quarter of 2018, as compared to $430.0 million at the end of the fourth quarter of last year.

Full Year Fiscal 2018 Results

  • Total revenue was $1,391.7 million, an increase of 26% year over year.
  • Average revenue per paying user was $117.64, as compared to $111.91 in the prior year.
  • GAAP gross margin was 71.6%, as compared to 66.7% in the prior year. Non-GAAP gross margin was 75.1%, as compared to 67.8% in the prior year.
  • GAAP operating margin was (35.5%), as compared to (10.3%) in the prior year. Non-GAAP operating margin was 12.2%, as compared to 5.5% in the prior year.
  • GAAP net loss was ($484.9) million, as compared to ($111.7) million in the prior year. Non-GAAP net income was $166.2 million, as compared to $59.9 million in the prior year.
  • Net cash provided by operating activities was $425.4 million, as compared to $330.3 million in the prior year. Free cash flow was $362.4 million, as compared to $305.0 million in the prior year.
  • GAAP basic and diluted net loss per share was ($1.35), as compared to ($0.57) in the prior year. Non-GAAP diluted net income per share was $0.41, as compared to $0.17 in the prior year. (2)

(1) Non-GAAP diluted net income per share is calculated based upon 416.3 million and 351.2 million diluted weighted-average shares of common stock for the three months ended December 31, 2018 and 2017, respectively.

(2) Non-GAAP diluted net income per share is calculated based upon 409.8 million and 347.7 million diluted weighted-average shares of common stock for the fiscal year ended December 31, 2018 and 2017, respectively.