Earnings To Watch: Dropbox (DBX) Reports Q1 Results Tomorrow

Kayode Omotosho /
2022/05/04 7:48 am EDT

Cloud storage and e-signature company Dropbox (Nasdaq: DBX) will be reporting earnings tomorrow after market hours. Here's what investors should know.

Last quarter Dropbox reported revenues of $565.5 million, up 12.1% year on year, beating analyst revenue expectations by 1.27%. It was a mixed quarter for the company with a decent beat of top-line estimates but slower customer growth. The company added 300,000 customers to a total of 16,790,000.

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 9.28% year on year to $559 million, slowing down from the 12.4% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.38 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 1.01%.

Looking at Dropbox's peers in the productivity software segment, some of them have already reported Q1 earnings results, giving us a hint what we can expect. Atlassian delivered top-line growth of 30.2% year on year, beating analyst estimates by 5.2% and Five9 reported revenues up 32.5% year on year, exceeding estimates by 6.96%. Atlassian traded down 3.8% on the results, and Five9 was up 5.2%. Read our full analysis of Atlassian's results here and Five9's results here.

Tech stocks have been facing declining investor sentiment in 2022 and software stocks have been swept alongside with it, with share price down on average 16.6% over the last month. Dropbox is down 8.02% during the same time, and is heading into the earnings with analyst price target of $32.7, compared to share price of $22.

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.