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Dropbox (DBX) Earnings and Revenues Beat Estimates in Q4
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Dropbox (DBX - Free Report) reported fourth-quarter 2020 non-GAAP earnings of 28 cents per share, which beat the Zacks Consensus Estimate by 21.7% and surged 75% from the figure reported in the year-ago quarter.
Revenues of $504.1 million beat the Zacks Consensus Estimate by 1.2%. The top line increased 13% on a year-over-year basis. On a constant-currency basis, revenues increased 13% year over year.
Shares of Dropbox declined 3.75% on Feb 19, in spite of better-than-expected fourth-quarter 2020 results. In the past year, the stock has returned 7.8% compared with the industry’s rally of 46.2%.
Average recurring revenues or ARR was $2.022 billion, up 11% (up 12% on constant currency) on a year-over-year basis. Increases in paying users and adoption of premium plans drove ARR growth.
Paying users came in at 15.48 million, up 8.2% on a year-over-year basis.
Average revenues per user (ARPU) stood at $130.17 in the fourth quarter of 2020, up 4.14% year over year.
Notably, HelloSign witnessed strong traction in the quarter under review. In the fourth quarter, HelloSign witnessed a 70% increase in end user signature requests.
HelloSign now boasts of 21 additional languages and management expects the product to gain a solid footing in international markets, courtesy of the extensive awareness campaign. HelloSign is an e-signature vendor that was acquired by Dropbox for $230 million in 2019.
In fourth quarter earnings conference call, Dropbox stated that slashing the force by 11% was aimed at achieving operational efficiency and to align with the company’s Virtual First Strategy.
In the third quarter of 2020, management adopted a Virtual First strategy under which the company will utilize both remote work and on-premises way of working. Management added that the work that can be executed single-handedly will be done remotely but the tasks that require collaboration with team members will be executed in the company’s offices that are now known as Dropbox Studios.
In the reported quarter, Dropbox announced that one of the biggest energy providers in the United States was leveraging Dropbox solutions along with 1000heads Group, a well-known Europe-based media company.
Margins
Dropbox’s non-GAAP gross margin in the quarter was up 250 basis points (bps) year over year to 80.1% in the fourth quarter of 2020.
Meanwhile, total non-GAAP operating expenses amounted to $276.1 million, almost flat on a year-over-year basis.
The company reported non-GAAP operating margin of 25.3% compared with 15.6% reported in the prior-year quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2020, Dropbox’s cash and cash equivalents (and short-term investments) came in at $1.121 billion compared with $1.226 billion as of Sep 30, 2020.
In the fourth quarter, net cash provided by operating activities came in at $170.7 million compared with $200.9 million reported in the third quarter of 2020.
Free cash flow was $158.4 million in the fourth quarter compared with $187 million reported in the third quarter of 2020.
In the fourth quarter of 2020, Dropbox repurchased 11 million shares worth $220 million. The company expects to complete its existing $600 million share buyback plan by the first quarter of 2021.
Additionally, the company also announced a $1-billion share repurchase authorization.
2020 Numbers in Details
Dropbox reported revenues of $1.914 billion in 2020, up 15% (up 16% on constant-currency basis) over 2019 tally.
Non-GAAP earnings per share were 93 cents compared with earnings per share of 50 cents reported in 2019.
For 2020, Dropbox’s non-GAAP gross margin expanded 300 bps to 79.4%, while non-GAAP operating margin expanded 910 bps 21.4%.
In 2020, Dropbox generated cash flow from operations of $570.8 million compared with $528.5 million in the previous year. Free cash flow for full year was $490.7 million compared with $392.4 million reported in 2019.
Guidance
Dropbox expects first-quarter 2021 revenues in the range of $504-$506 million. The Zacks Consensus Estimate is pegged at $501.7 million.
Further, the non-GAAP operating margin for the first quarter is projected between 27.5% and 28%.
For 2021, revenues are expected in the range of $2.095-$2.115 billion. The Zacks Consensus Estimate is pegged at $2.11 billion.
Non-GAAP operating margin is expected to be 27-28% for the year.
For 2021, free cash flow is now estimated in the range of $645-$655 million.
HP Inc and Workday are scheduled to release earnings on Feb 25, while CrowdStrike is slated to announce results on Mar 16.
Long-term earnings growth rate for HP, CrowdStrike and Workday are currently pegged at 5.4%, 25%, and 25.4%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Dropbox (DBX) Earnings and Revenues Beat Estimates in Q4
Dropbox (DBX - Free Report) reported fourth-quarter 2020 non-GAAP earnings of 28 cents per share, which beat the Zacks Consensus Estimate by 21.7% and surged 75% from the figure reported in the year-ago quarter.
Revenues of $504.1 million beat the Zacks Consensus Estimate by 1.2%. The top line increased 13% on a year-over-year basis. On a constant-currency basis, revenues increased 13% year over year.
Shares of Dropbox declined 3.75% on Feb 19, in spite of better-than-expected fourth-quarter 2020 results. In the past year, the stock has returned 7.8% compared with the industry’s rally of 46.2%.
Dropbox, Inc. Price, Consensus and EPS Surprise
Dropbox, Inc. price-consensus-eps-surprise-chart | Dropbox, Inc. Quote
Quarter in Details
Average recurring revenues or ARR was $2.022 billion, up 11% (up 12% on constant currency) on a year-over-year basis. Increases in paying users and adoption of premium plans drove ARR growth.
Paying users came in at 15.48 million, up 8.2% on a year-over-year basis.
Average revenues per user (ARPU) stood at $130.17 in the fourth quarter of 2020, up 4.14% year over year.
Notably, HelloSign witnessed strong traction in the quarter under review. In the fourth quarter, HelloSign witnessed a 70% increase in end user signature requests.
HelloSign now boasts of 21 additional languages and management expects the product to gain a solid footing in international markets, courtesy of the extensive awareness campaign. HelloSign is an e-signature vendor that was acquired by Dropbox for $230 million in 2019.
In fourth quarter earnings conference call, Dropbox stated that slashing the force by 11% was aimed at achieving operational efficiency and to align with the company’s Virtual First Strategy.
In the third quarter of 2020, management adopted a Virtual First strategy under which the company will utilize both remote work and on-premises way of working. Management added that the work that can be executed single-handedly will be done remotely but the tasks that require collaboration with team members will be executed in the company’s offices that are now known as Dropbox Studios.
In the reported quarter, Dropbox announced that one of the biggest energy providers in the United States was leveraging Dropbox solutions along with 1000heads Group, a well-known Europe-based media company.
Margins
Dropbox’s non-GAAP gross margin in the quarter was up 250 basis points (bps) year over year to 80.1% in the fourth quarter of 2020.
Meanwhile, total non-GAAP operating expenses amounted to $276.1 million, almost flat on a year-over-year basis.
The company reported non-GAAP operating margin of 25.3% compared with 15.6% reported in the prior-year quarter.
Balance Sheet & Cash Flow
As of Dec 31, 2020, Dropbox’s cash and cash equivalents (and short-term investments) came in at $1.121 billion compared with $1.226 billion as of Sep 30, 2020.
In the fourth quarter, net cash provided by operating activities came in at $170.7 million compared with $200.9 million reported in the third quarter of 2020.
Free cash flow was $158.4 million in the fourth quarter compared with $187 million reported in the third quarter of 2020.
In the fourth quarter of 2020, Dropbox repurchased 11 million shares worth $220 million. The company expects to complete its existing $600 million share buyback plan by the first quarter of 2021.
Additionally, the company also announced a $1-billion share repurchase authorization.
2020 Numbers in Details
Dropbox reported revenues of $1.914 billion in 2020, up 15% (up 16% on constant-currency basis) over 2019 tally.
Non-GAAP earnings per share were 93 cents compared with earnings per share of 50 cents reported in 2019.
For 2020, Dropbox’s non-GAAP gross margin expanded 300 bps to 79.4%, while non-GAAP operating margin expanded 910 bps 21.4%.
In 2020, Dropbox generated cash flow from operations of $570.8 million compared with $528.5 million in the previous year. Free cash flow for full year was $490.7 million compared with $392.4 million reported in 2019.
Guidance
Dropbox expects first-quarter 2021 revenues in the range of $504-$506 million. The Zacks Consensus Estimate is pegged at $501.7 million.
Further, the non-GAAP operating margin for the first quarter is projected between 27.5% and 28%.
For 2021, revenues are expected in the range of $2.095-$2.115 billion. The Zacks Consensus Estimate is pegged at $2.11 billion.
Non-GAAP operating margin is expected to be 27-28% for the year.
For 2021, free cash flow is now estimated in the range of $645-$655 million.
Zacks Rank & Stock to Consider
Dropbox currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are HP Inc (HPQ - Free Report) , CrowdStrike (CRWD - Free Report) and Workday (WDAY - Free Report) . All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here.
HP Inc and Workday are scheduled to release earnings on Feb 25, while CrowdStrike is slated to announce results on Mar 16.
Long-term earnings growth rate for HP, CrowdStrike and Workday are currently pegged at 5.4%, 25%, and 25.4%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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