Dropbox drops after earnings beat, COO Woodside to depart

  • Woodside is leaving Dropbox after joining in 2014.
  • Dropbox also beat expectations on earnings, revenue and guidance.
Dennis Woodside
Scott Eelis | Bloomberg | Getty Images
Dennis Woodside

Dropbox said on Thursday that its chief operating officer, Dennis Woodside, is stepping down. The company isn't naming a successor but is announcing two executive promotions.

Dropbox stock initially rose and then fell more than 10 percent after the company also announced better-than-expected earnings for the second quarter.

Here are the key numbers:

  • Earnings: 11 cents per share, excluding certain items, vs. 6 cents per share as expected by analysts, according to Thomson Reuters
  • Revenue: $339.2 million, vs. $330.9 million as expected by analysts, according to Thomson Reuters

Yamini Rangan, who joined Dropbox from Workday in 2016 as vice president of business strategy and operations, is becoming the company's chief customer officer, and vice president of communications Lin-Hua Wu, who joined from Square in 2016, will report to co-founder and CEO Drew Houston along with Rangan, the company said.

Woodside joined Dropbox as the company's operating chief in April 2014. Before that, he spent two years as CEO of Motorola Mobility, which is now owned by Lenovo. And prior to that, he was president of the Americas and senior vice president at Google. Google represents one of Dropbox's biggest competitors in the cloud storage and collaboration markets, along with Apple and Microsoft.

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Woodside joined Dropbox at a time when it was balancing the growth of free users and adoption inside of big businesses. Today the company has more than 500 million registered users and more than 1,800 employees. On his LinkedIn page, Woodside says that he has helped CEO Drew Houston "build Dropbox into a lasting technology company" and be accountable for the expansion of Dropbox's business and operations.

"We're grateful for everything Dennis has done for us," Houston said in a statement. "He's helped transform Dropbox into a publicly-traded company with over $1 billion in annual revenue and 12 offices around the world. Dennis will always be part of the Dropbox family, and we wish him all the best."

Woodside's last day at the company is Sept. 4, and he will stay on as an advisor until the end of 2018, Houston said on a conference call with analysts.

"I'm really excited to see what he does next," Houston said of Woodside in an interview with CNBC's Aditi Roy on Thursday. Woodside took a seat on the board of enterprise software company ServiceNow in April.

Dropbox's revenue was up 27 percent year over year in the second quarter, the company said.

It had 11.9 million paying users in the quarter, up 20 percent year over year. Dropbox saw 69 percent paid user growth in the fourth quarter.

Net cash from operating activities in the quarter was $111.9 million, below the FactSet analyst consensus of $119.3 million.

On the call Dropbox provided third-quarter guidance that exceeded estimates. The company expects to generate $350 million to $353 million in revenue for that period. Analysts had expected guidance of $345.9 million in revenue, according to Thomson Reuters.

The company also raised its guidance for the full year. It's now looking for $1.366 billion to $1.372 billion in revenue across all of 2018; analysts are expecting $1.357 billion in revenue, according to Thomson Reuters.

Immediately following the guidance, the stock slipped further — at one point it traded more than 11 percent below the closing price of $34.43 — but by the time the call ended, it rebounded to about 9.3 percent below closing price.

Dropbox was founded in 2007. The stock is up more than 20 percent from the closing price on March 23, its first day of trading. On Thursday during trading hours the stock was as much as 10 percent above the previous day's $31.55 closing price — its seventh consecutive day of gains.

Correction: This article has been revised to indicate that Dropbox has more than 1,800 employees.