Dropbox (DBX 23.45, -2.14, -8.35%), which operates a cloud-based document sharing
platform, is trading lower after
reporting Q4 results last night. This was just DBX's fourth earnings report as
a public company after making its IPO debut in March 2018. The stock has been
languishing since the IPO. We'll see if this report can get the stock back on a
Non-GAAP EPS more than tripled to $0.10 from $0.03 last year. This was better than market expectations but not as big of an upside as seen in Q2 and Q3. Revenue rose 23.0% yr/yr to $375.9 mln, ahead of prior guidance of $367-370 mln. In terms of key metrics investors pay close attention to, Paying Users totaled 12.7 mln vs 11.0 mln in the prior year. Non-GAAP operating margin in Q4 was 11.0% vs 3.3% last year and above prior guidance of 9-10%.
Average revenue per paying user (ARPU) was $119.61, up 5% from $113.39 for the same period last year. ARPU expansion was primarily driven by strong adoption of its Premium, Professional, and Advanced plans by new paying users. DBX also continues to see some tailwinds from teams choosing to remain on its Advanced plan following the expiration of their grandfathering period.
On the call, DBX noted a number of wins across a range of verticals, including transportation, insurance, and healthcare. For example, DBX was excited to announce a new enterprise deployment with Cabify, the leading Spanish ride hailing service. Cabify has operations in 11 countries and is rapidly growing its presence in the LatAm market.
One of the largest automobile services and insurance organizations in the country also chose Dropbox in Q4. The customer will roll out DBX's Enterprise plan after evaluating a number of tools to improve internal and external collaboration on large files. Dropbox was chosen as the preferred vendor due to ease of use and its open APIs. In addition, Nationwide Children's Hospital recently expanded its team deployment after first adopting Dropbox in 2016. DBX's ability to provide a secure HIPAA compliant workflow platform was key.
In sum, it was a decent quarter but perhaps not as robust as prior quarters. Also, the Q1 non-GAAP operating margin guidance of 7-8% may be spooking investors a bit after the 11% margin achieved in Q4. However, that may be due to partly due to seasonal factors.
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