Dropbox (DBX) Q1 Earnings: What To Expect

Kayode Omotosho /
2023/05/03 3:31 am EDT

Cloud storage and e-signature company Dropbox (Nasdaq: DBX) will be reporting results tomorrow after market hours. Here's what to expect.

Last quarter Dropbox reported revenues of $598.8 million, up 5.89% year on year, in line with analyst expectations. It was a mixed quarter for the company, with accelerating customer growth but slow revenue growth. The company added 220,000 customers to a total of 17,770,000.

Is Dropbox buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Dropbox's revenue to grow 6.88% year on year to $601.1 million, slowing down from the 9.93% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.36 per share.

Dropbox Total Revenue

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 0.93%.

Looking at Dropbox's peers in the productivity software segment, some of them have already reported Q1 earnings results, giving us a hint of what we can expect. Pegasystems's revenues decreased 13.5% year on year, missing analyst estimates by 7.14% and ServiceNow reported revenues up 21.7% year on year, exceeding estimates by 0.5%. Pegasystems traded up 4.19% on the results, ServiceNow was up 2.01%. Read our full analysis of Pegasystems's results here and ServiceNow's results here.

Triggered by the Federal Reserve's hawkish stance on interest rates, shares of technology companies have been facing sell-off since 2022 and while some of the software stocks have fared somewhat better, they have not been spared, with share price declining 9.49% over the last month. Dropbox is down 5.57% during the same time, and is heading into the earnings with analyst price target of $26.9, compared to share price of $20.16.

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.