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Factors Setting Tone Ahead of Dropbox's (DBX) Q4 Earnings
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Dropbox (DBX - Free Report) is scheduled to report fourth-quarter 2020 results on Feb 18.
For the fourth quarter, the company expects revenues (on constant currency basis) between $497 million and $499 million.
The Zacks Consensus Estimate for revenues is pegged at $498.1 million, which indicates growth of 11.7% from the year-ago quarter’s reported figure.
Moreover, the consensus mark for fourth-quarter earnings has remained unchanged at 23 cents per share in the past 30 days. This suggests an improvement of 43.8% from the prior-year quarter’s levels.
Notably, the company beat estimates in each of the last four quarters. It has a trailing four-quarter earnings surprise of 25.5%, on average.
Factors Likely to Have Influenced Q4 Performance
Continuation of work-from-home set up due to the ongoing pandemic is driving demand for cloud storage, which is likely to have led to incremental adoption of the Dropbox platform in the fourth quarter.
The company has been witnessing growth in user base of Plus subscription plan for individuals, due to strength in Dropbox Transfer, Smart Sync and Dropbox Rewind functionalities.
In the third quarter of 2020, the company teamed up with Adobe (ADBE - Free Report) to roll out Dropbox Transfer for Adobe Creative Cloud.
In the last reported quarter, Dropbox also launched two add-ons —Data Migration and Creative Tools — to aid users, especially media professionals, with their work.
Creative Tools will simplify working with large media files for users while Data Migration add on will allow users to transfer files and permission to Dropbox Business from any local and other cloud storage locations. The company also launched its new Dropbox Family Plan in the third quarter that offers support for up to six family members under one plan.
The adoption of the latest offerings is expected to have positively impacted Dropbox’s top line in the fourth quarter.
Dropbox’s HelloSign is also expected to have witnessed robust uptake in the to-be-reported quarter as businesses continue with remote work set up. Also, in the third quarter, the company extended support for 21 new languages for HelloSign and is working on marketing campaign to boost adoption internationally. HelloSign is Dropbox’s eSignature product.
Moreover, strong focus on product innovation and introduction of new features like Dropbox Passwords, Dropbox Vault, Dropbox Backup and Dropbox Spaces is anticipated to have contributed to growth in paying users. This, in turn, is expected to get reflected in the company’s about to be reported performance.
In third-quarter 2020, paying users totaled 15.25 million, up 8.9% year over year. Notably, the Zacks Consensus Estimate for fourth-quarter paying users currently is at 15.39 million, indicating year-over-year growth of 7.6%.
Further, integration with leading applications like Zoom Video and Atlassian may have led to increasing utilization of the platform. These factors are likely to positively impact growth of average revenue per paying user.
In third-quarter 2020, average revenue per paying user was $128.03 compared with $123.15 in prior-year quarter. The consensus mark for the same in the fourth quarter is currently pegged at $129, which suggests an increase from $125 reported in the year-ago quarter.
Moreover, inclination toward web-based learning has resulted in increasing usage of Dropbox Paper among higher-education institutions and universities.
However, higher investments toward product development amid stiff competition from services like Google Drive, Microsoft One Drive, and Citrix ShareFile might have limited margin expansion in the fourth quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Dropbox this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Dropbox has a Zacks Rank #3 and an Earnings ESP of +3.45%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some other stocks which you may consider as our proven model shows that these also have the right mix of elements to beat estimates this time around:
Workday (WDAY - Free Report) has an Earnings ESP of +1.16% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Factors Setting Tone Ahead of Dropbox's (DBX) Q4 Earnings
Dropbox (DBX - Free Report) is scheduled to report fourth-quarter 2020 results on Feb 18.
For the fourth quarter, the company expects revenues (on constant currency basis) between $497 million and $499 million.
The Zacks Consensus Estimate for revenues is pegged at $498.1 million, which indicates growth of 11.7% from the year-ago quarter’s reported figure.
Moreover, the consensus mark for fourth-quarter earnings has remained unchanged at 23 cents per share in the past 30 days. This suggests an improvement of 43.8% from the prior-year quarter’s levels.
Dropbox, Inc. Price and EPS Surprise
Dropbox, Inc. price-eps-surprise | Dropbox, Inc. Quote
Notably, the company beat estimates in each of the last four quarters. It has a trailing four-quarter earnings surprise of 25.5%, on average.
Factors Likely to Have Influenced Q4 Performance
Continuation of work-from-home set up due to the ongoing pandemic is driving demand for cloud storage, which is likely to have led to incremental adoption of the Dropbox platform in the fourth quarter.
The company has been witnessing growth in user base of Plus subscription plan for individuals, due to strength in Dropbox Transfer, Smart Sync and Dropbox Rewind functionalities.
In the third quarter of 2020, the company teamed up with Adobe (ADBE - Free Report) to roll out Dropbox Transfer for Adobe Creative Cloud.
In the last reported quarter, Dropbox also launched two add-ons —Data Migration and Creative Tools — to aid users, especially media professionals, with their work.
Creative Tools will simplify working with large media files for users while Data Migration add on will allow users to transfer files and permission to Dropbox Business from any local and other cloud storage locations. The company also launched its new Dropbox Family Plan in the third quarter that offers support for up to six family members under one plan.
The adoption of the latest offerings is expected to have positively impacted Dropbox’s top line in the fourth quarter.
Dropbox’s HelloSign is also expected to have witnessed robust uptake in the to-be-reported quarter as businesses continue with remote work set up. Also, in the third quarter, the company extended support for 21 new languages for HelloSign and is working on marketing campaign to boost adoption internationally. HelloSign is Dropbox’s eSignature product.
Moreover, strong focus on product innovation and introduction of new features like Dropbox Passwords, Dropbox Vault, Dropbox Backup and Dropbox Spaces is anticipated to have contributed to growth in paying users. This, in turn, is expected to get reflected in the company’s about to be reported performance.
In third-quarter 2020, paying users totaled 15.25 million, up 8.9% year over year. Notably, the Zacks Consensus Estimate for fourth-quarter paying users currently is at 15.39 million, indicating year-over-year growth of 7.6%.
Further, integration with leading applications like Zoom Video and Atlassian may have led to increasing utilization of the platform. These factors are likely to positively impact growth of average revenue per paying user.
In third-quarter 2020, average revenue per paying user was $128.03 compared with $123.15 in prior-year quarter. The consensus mark for the same in the fourth quarter is currently pegged at $129, which suggests an increase from $125 reported in the year-ago quarter.
Moreover, inclination toward web-based learning has resulted in increasing usage of Dropbox Paper among higher-education institutions and universities.
However, higher investments toward product development amid stiff competition from services like Google Drive, Microsoft One Drive, and Citrix ShareFile might have limited margin expansion in the fourth quarter.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for Dropbox this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Dropbox has a Zacks Rank #3 and an Earnings ESP of +3.45%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Stocks to Consider
Here are some other stocks which you may consider as our proven model shows that these also have the right mix of elements to beat estimates this time around:
CrowdStrike (CRWD - Free Report) has an Earnings ESP of +57.75% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Workday (WDAY - Free Report) has an Earnings ESP of +1.16% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>