Dropbox slips to a loss after taking $400 million real estate hit due to remote work
- Dropbox swung from being profitable to losing money in the fourth quarter as it transitioned to a remote configuration, following technology companies such as Atlassian and Twitter.
- The impairment charge resulting from the changes was excluded from non-GAAP results, which showed an annualized increase in profit.
Dropbox on Thursday reported a $398.2 million one-time charge in the fourth quarter to reflect the company's shift to remote work.
As the coronavirus emerged in the U.S. last year, companies closed offices and pushed their employees to work from their homes. Some companies observed that the remote work did not hurt -- and in some cases helped -- productivity and employee satisfaction, and sought to make it more permanent. That can come at a cost for companies with considerable real-estate footprints.
Dropbox, which makes cloud-based storage and productivity software and is known for its lavish office space in San Francisco's South of Market neighborhood, announced its "virtual first" remote-work plan in October.
"Remote work (outside an office) will be the primary experience for all employees and the day-to-day default for individual work," Dropbox said in a blog post. Some office space will remain for collaboration, and Dropbox will sublease some of the space.
In the first, second and third quarters of 2020, Dropbox reported net income after years of losing money. The impairment charge from "right-of-use and other lease related assets" that Dropbox disclosed in its fourth-quarter earnings statement reverses that streak, resulting in a nearly $346 million loss for the company, compared with a $33 million profit in the third quarter.
The charge was excluded from non-GAAP results, which reflected 28 cents in earnings per share, up from 16 cents in the year-ago quarter, and exceeded the consensus of 24 cents per share expected by analysts polled by Refinitiv. Dropbox shares were down 1% in extended trading.
Before Dropbox committed to having its people work remotely, technology companies including Atlassian, Twitter and Zillow had said they would allow employees to continue working from home even after the pandemic subsides. Earlier this month, San Francisco's biggest employer, Salesforce, said that most of its employees will be in offices one to three days per week once it's safe enough to return.
In October, after thousands of its employees had gotten used to working without being next to their colleagues, Pinterest said it had agreed to pay $89.5 million to stop a lease for 490,000 square feet of office space near its San Francisco headquarters. That way, it wouldn't have to pay at least $440 million in rent.
WATCH: Dropbox CEO on 'virtual first' initiative for employees to work-from-home