Tech

Dropbox rises after company posts first quarterly profit

Key Points
  • Dropbox's bottom line is in the black for the first time since the company debuted on the Nasdaq in 2018.
  • The company beat estimates for revenue and adjusted earnings.
  • Guidance will come on the company's conference call.
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Dropbox CEO: We've seen more demand, engagement up

Dropbox shares rose about 2% in after-hours trading after the company showed its first quarterly profit. CEO Drew Houston said in February that the company's goal was to be profitable by the end of the year.

Here's how the company did in Q1 2020:

  • Earnings: 17 cents per share, adjusted
  • Revenue: $455.0 million

Dropbox posted $39.3 million in net income, or 9 cents per share, according to a statement. The company expects to have a profit for the full year, Ajay Vashee, its finance chief, said on a conference call with analysts.

The company said that coronavirus quarantines and the encouragement of remote work will help its business even as the lockdowns end.

"Certainly, a huge percentage of the world is being forced into a remote work state for the first time, but I think the effects of it will persist well beyond when we typically go back into the office," Houston said on Thursday's call.

Analysts polled by Refinitiv had expected 14 cents in adjusted earnings per share on $452.2 million in revenue. However, comparing results against estimates isn't straightforward given that the coronavirus spread during the quarter.

Revenue grew 18% in the quarter, down from 19% growth in the fourth quarter.

The company reported 14.6 million paying users at the end of the first quarter, in line with analysts' expectations and up from 14.3 million one quarter ago. The number of weekly active users of Dropbox's redesigned desktop app is up about 60% since March, the company said in a blog post on Thursday.

With respect to guidance, Dropbox expects $463 million to $466 million in second-quarter revenue. Analysts polled by Refinitiv had expected $476.1 in revenue for the second quarter.

For all of 2020 Dropbox now sees $1.88 billion to $1.90 billion in revenue, slightly ahead of consensus analyst estimates of $1.88 billion.

To reflect foreign-exchange impact and lower interest rates, Dropbox brought down its 2020 free-cash-flow forecast to a range of $460 million to $470 million. Analysts polled by FactSet had been looking for $481 million in free cash flow for the year.

Dropbox stock debuted on the Nasdaq in 2018. The company had positive free cash flow in 2016 after a year of negative free cash flow, according to the prospectus for its initial public offering.

Notwithstanding the after-hours move, Dropbox shares are up about 22% for the year.