9097

Dropbox (NASDAQ:DBX) Q3 Sales Beat Estimates


Jabin Bastian /
2021/11/04 4:18 pm EDT
Add to Watchlist

Cloud storage and e-signature company Dropbox (Nasdaq: DBX) announced better-than-expected results in the Q3 FY2021 quarter, with revenue up 12.8% year on year to $550.2 million. Dropbox made a GAAP profit of $75.6 million, improving on its profit of $32.7 million, in the same quarter last year.

Is now the time to buy Dropbox? Access our full analysis of the earnings results here, it's free.

Dropbox (DBX) Q3 FY2021 Highlights:

  • Revenue: $550.2 million vs analyst estimates of $544.7 million (1% beat)
  • EPS (non-GAAP): $0.37 vs analyst estimates of $0.35 (4.71% beat)
  • Free cash flow of $221.5 million, roughly flat from previous quarter
  • Customers: 16,490,000, up from 16,140,000 in previous quarter
  • Gross Margin (GAAP): 79.6%, up from 78.8% same quarter last year

“Q3 was another solid quarter with record free cash flow, strong revenue growth, and great progress against our strategic objectives as we focus on delivering more value to our customers and shareholders,” said Dropbox Co-Founder and Chief Executive Officer Drew Houston.

Founded by the long-serving CEO Drew Houston and Arash Ferdowsi in 2007, Dropbox (NASDAQ:DBX) provides a file hosting cloud platform that helps organizations collaborate and share documents.

The acceleration of digital transformation initiatives by enterprises, coupled with the growing volume of data generated by businesses are important factors that are driving the demand for cloud storage and document management platforms.

Sales Growth

As you can see below, Dropbox's revenue growth has been slower over the last year, growing from quarterly revenue of $487.4 million, to $550.2 million.

Dropbox Total Revenue

This quarter, Dropbox's quarterly revenue was up 12.8% year on year. We can see that revenue increased by $19.6 million in Q3, which was roughly the same as in Q2 2021. This steady quarter-on-quarter growth shows the company is able to maintain its paced growth trajectory.

Analysts covering the company are expecting the revenues to grow 8.9% over the next twelve months, although estimates are likely to change post earnings.

There are others doing even better than Dropbox. Founded by ex-Google engineers, a small company making software for banks has been growing revenue 90% year on year and is already up more than 400% since the IPO in December. You can find it on our platform for free.

Customer Growth

You can see below that Dropbox reported 16,490,000 customers at the end of the quarter, an increase of 350,000 on last quarter. That is quite a bit better customer growth than last quarter and quite a bit above the typical customer growth we have seen lately, demonstrating that the business itself has good sales momentum. We've no doubt shareholders will take this as an indication that the company's go-to-market strategy is working very well.

Dropbox Customers

Key Takeaways from Dropbox's Q3 Results

Sporting a market capitalization of $11.8 billion, more than $1.92 billion in cash and with positive free cash flow over the last twelve months, we're confident that Dropbox has the resources it needs to pursue a high growth business strategy.

It was good to see that Dropbox’s customer growth is staying on a steady trajectory. And we were also happy to see it topped analysts’ revenue expectations, even if just narrowly. On the other hand, revenue growth is overall a bit slower these days. Overall, this quarter's results could have been better. The company is up 0.61% on the results and currently trades at $31.2 per share.

Should you invest in Dropbox right now? It is important that you take into account its valuation and business qualities, as well as what happened in the latest quarter. We look at that in our actionable report which you can read here, it's free.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.