Dropbox: Fiscal 3Q20 Financial Results

(in $ million)	3Q19	3Q20	9 mo. 19	9 mo. 20
Revenue	428.2	487.4	1,215	1,410
*Growth*		+14%		*+16%*
Net income (loss)	(17.0)	32.7	(46.1)	89.5

Dropbox, Inc. announced financial results for its third fiscal quarter ended September 30, 2020.

“In 3FQ20, we saw momentum across the business with strong operating income, profitability, and free cash flow,” said co-founder and CEO Drew Houston. “Our margin expansion demonstrates the strength of our business model and execution vs. our long-term targets. We believe the opportunity to redesign work has never been bigger, and now, as a Virtual First company, we’ll truly live our mission as we build better products for distributed teams.“

3FQ20 Results
• Total revenue was $487.4 million, an increase of 14% from 3FQ19. On a constant currency basis, Y/Y growth would have been 14%.
• Total ARR ended at $1.981 billion, an increase of $49.8 million Q/Q and an increase of 12% Y/Y. On a constant currency basis, Y/Y growth would have been 13%.(2)
• Paying users ended at 15.25 million, as compared to 14.00 million for 3FQ19. Average revenue per paying user was $128.03, as compared to $123.15 for 3FQ19.
• GAAP gross margin was 78.8%, as compared to 75.5% in 3FQ19. Non-GAAP gross margin was 80.0%, as compared to 76.7% in 3FQ19.
• GAAP operating margin was 6.2%, as compared to (4.3)% in 3FQ19. Non-GAAP operating margin was 23.0%, as compared to 13.1% in 3FQ19.
• GAAP net income (loss) was $32.7 million, as compared to ($17.0) million in 3FQ19. Non-GAAP net income was $110. million, as compared to $55.9 million in 3FQ19.
• Net cash provided by operating activities was $200.9 million, as compared to $149.7 million in 3FQ19. Free cash flow was $187.0 million, as compared to $102.5 million in 3FQ19.
• GAAP net income (loss) per share attributable to common stockholders was $0.08, as compared to ($0.04) in 3FQ19. Non-GAAP net income per share attributable to common stockholders was $0.26, as compared to $0.13 in 3FQ19.
• Cash, cash equivalents and short-term investments ended at $1.226 billion.

Comments

Guidance announced former quarter for 3FQ20 was revenue to be in the range of $481 million to $484 million, or up 3% to 4%. Finally global sales reached $487.4 million up 14% from 3FQ19 and 4% from 2FQ20.

The company ended 3FQ20 with 15.25 million paying users, adding over 290,000 net new paying users in the quarter. ARPU was $128.03.

For 4FQ20, it expects revenue in the range of $497 million to $499 million, on a constant currency basis, and estimates that it would be approximately $2 million lower. non-GAAP operating margin is expected to be in the range of 22% to 22.5%.

For FY20, the firm raised its revenue guidance range, which was previously $1.891 billion to $1.901 billion to $1.907 billion to $1.909 billion, to be compared to $1,662 million in FY19, which means a yearly increase between 14% and 15%.

Its objectives is to deliver operating margins between 28% to 30% and annual free cash flow of $1 billion in 2024.