Dropbox: Fiscal 1Q19 Financial Results

Dropbox, Inc. announced financial results for its first fiscal quarter ended March 31, 2019.

“We kicked off 2019 with a strong Q1, driven by continued paying user growth and ARPU expansion,” said Dropbox co-founder and CEO. “Our 22% top line growth and robust operating margins reflect our efficient go-to-market strategy and operational discipline. We’ve reached a scale few SaaS companies have achieved and continue to ship product experiences that put Dropbox at the center of our users’ workflows. We also closed our first acquisition as a public company with HelloSign, and I’m excited about our future together.”

1FQ19 Results
• Total revenue was $385.6 million, an increase of 22% from 1FQ18.
• Paying users totaled 13.2 million, inclusive of 0.1 million incremental paying users from the acquisition of HelloSign, as compared to 11.5 million for 1FQ18. Average revenue per paying user was $121.04, as compared to $114.30 for 1FQ18.
• GAAP gross margin was 74.5%, as compared to 61.9% in 1FQ18. Non-GAAP gross margin was 75.4%, as compared to 74.2% in 1FQ18.
• GAAP operating margin was (5.5%), as compared to (147.3%) in 1FQ18. Non-GAAP operating margin was 10.1%, as compared to 10.9% in 1FQ18.
• GAAP net loss was ($7.7) million, as compared to ($465.5) million in 1FQ18. Non-GAAP net income was $41.7 million, as compared to $30.9 million in 1FQ18.
• Net cash provided by operating activities was $63.2 million, as compared to $61.8 million in 1FQ18. Free cash flow was $33.5 million, as compared to $51.9 million in 1FQ18.
• GAAP basic and diluted net loss per share was ($0.02), as compared to ($2.13) in 1FQ18. Non-GAAP diluted net income per share was $0.10, as compared to $0.08 in 1FQ18.
• Cash, cash equivalents and short-term investments were $915.2 million at the end of 1FQ19.

HelloSign Acquisition
Dropbox completed the acquisition of JN Projects, Inc. (d/b/a HelloSign), which provides an e-signature and document workflow platform, on February 8, 2019 for $230 million, consisting primarily of cash payments, subject to customary purchase price adjustments. Of the $230 million of consideration, $48.5 million is subject to on-going employee service. The acquisition of HelloSign expands Dropbox’s content collaboration capabilities to include additional business-critical workflows.