Dropbox Inc. delivered strong third quarter financial results today, beating Wall Street’s forecasts on earnings and revenue and offering guidance that came in above expectations.
The file-sharing company reported earnings before certain costs such as stock compensation of 43 cents per share, with revenue coming to $591 million in the period, up 7.4% from a year earlier. Altogether, the company netted a profit of $83.2 million.
The results were good, with Wall Street analysts modeling lower earnings of just 37 cents per share on sales of $585.5 million. Dropbox’s share price stayed flat in after-hours trading.
Dropbox is an iconic name for many office workers, having established itself as a leading provider of cloud-based file storage and sharing tools. Its software is used by thousands of companies globally to organize, manage, share and collaborate on important business documents. In addition to its basic storage and sharing capabilities, Dropbox provides tools for companies to track how files are shared and used across an organization. It also enhances file security with password protection and other features. So a user can share a password needed to access a sensitive file, prevent it from being copied, and then revoke access if required.
Dropbox co-founder and Chief Executive Drew Houston (pictured) said the company’s strong quarter was an impressive achievement against an increasingly challenging macroeconomic backdrop. “In particular, we’re pleased with the results of the changes to our team’s plans, and excited about our progress innovating around new products and driving multi product adoption, including the release of Capture to all Dropbox users and the introduction of the rebranded Dropbox Sign,” Houston said. “As we look towards 2023 and beyond, I’m proud of our team’s execution towards our strategy while maintaining a healthy balance of growth and profitability.”
Dropbox has shown an ability to grow consistently if not rapidly. At the height of the COVID-19 pandemic, it earned some criticism for its rather laborious growth rate at a time when many digital services providers were doubling or tripling their revenues. But the company’s ability to maintain its growth during tougher times indicates that it might be slow and steady growth that ultimately wins the race..
The company reported annual recurring revenue of $2.431 billion at the end of the quarter, up 9.6% from a year earlier. Its paying user count increased to 17.55 million, up from 16.49 million in the same period last year. Meanwhile, average revenue per paying user also increased, rising to $134.31 from $133.79 last year.
Looking to the fourth quarter, Dropbox said it anticipates revenue of between $592 million and $595 million, which is more or less in line with Wall Street’s guidance of $593.7 million. Dropbox also raised its full year guidance. It said it now sees fiscal 2022 revenue of between $2.318 billion and $2.321 billion, up from an earlier range of $2.308 billion to $2.318 billion.