Cloud storage and e-signature company Dropbox (Nasdaq: DBX) announced better-than-expected results in the Q4 FY2021 quarter, with revenue up 12.1% year on year to $565.5 million. Dropbox made a GAAP profit of $124.6 million, improving on its loss of $345.8 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) Q4 FY2021 Highlights:
- Revenue: $565.5 million vs analyst estimates of $558.3 million (1.27% beat)
- EPS (non-GAAP): $0.41 vs analyst estimates of $0.36 (12.4% beat)
- Free cash flow of $161.4 million, down 27.1% from previous quarter
- Customers: 16,790,000, up from 16,490,000 in previous quarter
- Gross Margin (GAAP): 79.5%, in line with same quarter last year
“2021 was a strong year for Dropbox. I’m proud of the progress our team made on evolving our core offerings and expanding our product portfolio to align to our customers’ growing needs, all during our first year as a Virtual First company,” 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 catch phrase 'digital transformation' orginally referred to the digitization of documents within enterprises. The growth of digital documents has spurred an explosion of collaboration within and between businesses, which in turn is driving the demand for e-signature and content management platforms.
As you can see below, Dropbox's revenue growth has been unremarkable over the last year, growing from quarterly revenue of $504.1 million, to $565.5 million.
This quarter, Dropbox's quarterly revenue was once again up 12.1% year on year. But the growth did slow down compared to last quarter, as the revenue increased by just $15.3 million in Q4, compared to $19.6 million in Q3 2021. We'd like to see revenue increase by a greater amount each quarter, but a one-off fluctuation is usually not concerning.
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 150% since the IPO last December. You can find it on our platform for free.
You can see below that Dropbox reported 16,790,000 customers at the end of the quarter, an increase of 300,000 on last quarter. That is a little slower customer growth than last quarter but still in line with what we are used to seeing lately, suggesting that the company still has decent sales momentum.
Key Takeaways from Dropbox's Q4 Results
With a market capitalization of $9.46 billion Dropbox is among smaller companies, but its more than $1.71 billion in cash and positive free cash flow over the last twelve months put it in a very strong position to invest in growth.
Dropbox topped analysts’ revenue expectations this quarter, even if just narrowly and beat strongly on EPS. That feature of these results really stood out as a positive. On the other hand there was a slight slowdown in customer growth. Overall, in our opinion this quarter's results were still very optimistic. The company is up 7.78% on the results and currently trades at $25.4 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.