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Dropbox (DBX) to Report Q3 Earnings: What's in the Cards?

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Dropbox (DBX - Free Report) is set to release third-quarter 2021 results on Nov 4.

For the quarter, the company expects revenues between $543 million and $546 million. The Zacks Consensus Estimate for revenues is pegged at $543 million, suggesting an improvement of 11.4% from the year-ago quarter’s reported figure.

The consensus mark for earnings is pegged at 35 cents per share, unchanged over the past 30 days and indicating growth of 34.6% from the figure reported in the year-ago quarter.

Dropbox’s earnings beat the Zacks Consensus Estimate in all of the trailing four quarters, delivering an earnings surprise of 24.1%, on average.
 

Dropbox, Inc. Price and EPS Surprise

Dropbox, Inc. Price and EPS Surprise

Dropbox, Inc. price-eps-surprise | Dropbox, Inc. Quote

 

Let’s see how things have shaped up for Dropbox prior to this announcement:

Factors to Consider

Dropbox’s HelloSign is expected to have witnessed robust uptake in the third quarter as businesses continue with the work-from-home set up. DocSend is another solution that has gained traction in the to-be-reported quarter.

Further, ongoing momentum in remote-work wave due to the pandemic is driving demand for cloud storage, which is likely to have led to incremental adoption of the Dropbox platform in the third quarter.

The company has been witnessing growth in user base of the Plus subscription plan for individuals after it started offering its Professional premium individual SKU designed for small businesses and freelancers.

Dropbox is likely to have witnessed gains from uptick in its new Family Plan, which offers support for up to six family members under one plan.

In second-quarter 2021, paying users totaled 16.14 million, up 9% year over year.

Additionally, integration with leading applications like Zoom and Atlassian may have led to increasing utilization of the platform. These factors are likely to have positively impacted growth of average revenue per paying user.

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 third quarter.

What Our Model Says

Per the Zacks model, 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. But that’s not the case here.

Dropbox has an Earnings ESP of 0.00% and carries a Zacks Rank #3 currently. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Applied Materials (AMAT - Free Report) has an Earnings ESP of +0.52% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Synaptics (SYNA - Free Report) has an Earnings ESP of +0.38% and a Zacks Rank #2.

PerkinElmer has an Earnings ESP of +5.20% and a Zacks Rank #2.


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