Dropbox is sinking even though it just beat Wall Street's targets in its first-ever earnings report

Steve Jennings / Stringer / Getty ImagesDropbox CEO Drew Houston
  • The file sharing company Dropbox reported earnings for the first time ever on Thursday.
  • The company beat Wall Street’s expectations on both revenue and earnings per shares but didn’t give guidance for the upcoming quarters.
  • Dropbox went public at the end of March and is now valued at $US12.5 billion on the public markets.
  • Analysts had high expectations of Dropbox. They’re looking for modest revenue gains, and also want to see growth in key areas like paid users.

Dropbox beat Wall Street’s Q1 targets and gave a better-than-expected business forecast on Thursday in its first quarterly report card as a public company. But with investors having already bid up the stock sharply in the first few weeks since its IPO, shares of Dropbox slipped slightly after the “beat-and-raise” report.

The cloud storage company’s revenue increased 28% in the first three months of the year, above the 24.5% clip expected by Wall Street.

And Dropbox said revenue in the second quarter would range between $US328 million and $US331 million, topping the $US325.6 million expected by analysts.

Shares of Dropbox, which are up roughly 50% since the company’s March IPO, fell 4% in after hours trading on Thursday following the report.

Here’s what Dropbox reported:

  • Revenue (GAAP) for the quarter: Dropbox reported $US316 million, up 28% from the year before.Analysts expected $US308.7 million.
  • Earnings per share (Adjusted) for the quarter:Dropbox reported $US0.08. Analysts expected $US0.02.
  • Net loss (GAAP) was $US465.5 million, as compared to a loss of $US33.1 million in the same period last year, but $US418.7 million of that is related to its IPO.
  • Q2 Revenue guidance: $US328 million to $US331 million, versus $US325.6 million expected by analysts.
  • Full year 2018 guidance: $US1.343 billion to $US1.355 billion, versus $US1.33 billion expected by analysts.

“Some of the good news is that we have been cash flow positive for a long time. We didn’t need to go public to raise money; we think it’s a good thing to have a healthy balance sheet but we can be opportunistic,” CEO Drew Houston said on the conference call.

Analysts also kept their eyes peeled for Dropbox’s paid user growth, average revenue per user, non-GAAP gross margin and free cash flow.

  • Dropbox had a total of 11.5 million paying users, compared to 9.3 million for the same period last year.
  • The average revenue per paying user was $US114.30, compared to $US110.79 for the same period last year.
  • Non-GAAP gross margin was 74.2%, compared to 63.5% in the same period last year.
  • Free cash flow was $US51.9 million, compared to $US56.5 million in the same period last year.

Dropbox, now valued at $US12.5 billion on the public markets, began trading on the Nasdaq at the end of March in what was widely considered a successful IPO.

Read more about what analysts expected from Dropbox here on BI Prime.

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