Dropbox: Fiscal 2Q20 Financial Results

Dropbox, Inc. announced financial results for its second fiscal quarter ended June 30, 2020.

“Our Q2 results are a testament to our teams’ hard work supporting our customers in this new environment,” said co-founder and CEO Drew Houston. “Over the past quarter, we introduced a number of products to help facilitate distributed work, addressing both team and personal use cases. With solid revenue growth, robust margin expansion, and continued GAAP profitability, we remain confident in the resiliency of our business.”

2FQ20 Results
• Total revenue was $467.4 million, an increase of 16% from 2FQ19. On a constant currency basis, Y/Y growth would have been 18%.
• Total ARR ended at $1.931 billion, an increase of $67.3 million Q/Q and an increase of 17% Y/Y. On a constant currency basis, Y/Y growth would have been 18%.
• Paying users ended at 15.0 million, as compared to 13.6 million for 2FQ19. Average revenue per paying user was $126.88, as compared to $120.48 for 2FQ19.
• GAAP gross margin was 78.1%, as compared to 74.4% in 2FQ19. Non-GAAP gross margin was 79.2%, as compared to 75.8% in 2FQ19.
• GAAP operating margin was 2.7%, as compared to (8.5)% in 2FQ19. Non-GAAP operating margin was 20.6%, as compared to 10.1% in 2FQ19.
• GAAP net income (loss) was $17.5 million, as compared to ($21.4) million in 2FQ19. Non-GAAP net income was $93.2 million, as compared to $42.0 million in 2FQ19.
• Net cash provided by operating activities was $145.9 million, as compared to $128.8 million in 2FQ19. Free cash flow was $119.8 million, as compared to $95.1 million in 2FQ19.
• GAAP basic and diluted net income (loss) per share was $0.04, as compared to ($0.05) in 2FQ19. Non-GAAP diluted net income per share was $0.22, as compared to $0.10 in 2FQ19.
• Cash, cash equivalents and short-term investments were $1.118 billion at 2FQ20.

CFO transition
The company also announced that Ajay Vashee is stepping down as CFO after more than 8 years at the company. He’ll remain in the role until September 15, 2020, at which point Tim Regan, the company’s current chief accounting officer, will become the company’s new CFO. Vashee will remain as an advisor through mid-October to ensure a smooth transition.

“Being part of Dropbox has been an amazing experience, and I’m so proud of everything we’ve accomplished together,” said Vashee. “We’ve grown from a 100 employee private start-up when I first started, to a nearly 3,000 employee profitable public company. Thank you to Houston and the management team for the privilege of being part of the company’s incredible journey.”

“It’s always hard to see such beloved leaders like Ajay leave the company, but I’m grateful for the many years of commitment and dedication he’s given to Dropbox,” said Houston. “I’m also happy to welcome Tim as our new CFO. With his decades of experience and the impact he’s already had at Dropbox as our CAO, I’m confident in his ability to lead our finance organization to the next stage of growth.“

In his nearly 4 years at Dropbox, Regan has demonstrated leadership, discipline, and the operational skill needed to run the finance organization. He has 2 two decades of experience in finance prior to Dropbox, from his role as VP finance and controller at Pandora Media, Inc., to senior positions at Dolby Laboratories, Inc., and Ernst and Young, LLP.

“Thank you to Houston and the management team for this opportunity,” said Regan. “It was clear to me when I first joined Dropbox a few years ago that this was a special company with an even greater future in store. I’m excited to take on the role of CFO and continue the great work of the finance organization to build a sustainable, profitable business for the long-term.“