Dropbox: Fiscal 4Q19 Financial Results

• FQ19 Revenue of $446.0 Million, Up 19% Y/Y Net Cash Provided by Operating Activities of $186.8 Million and
• Free Cash Flow of $161.3 Million
• FY19 Revenue of $1.661 Billion, Up 19% Y/Y
• Net Cash Provided by Operating Activities of $528.5 Million and Free Cash Flow of $392.4 Million
• The Board of directors Authorized to Repurchase up to $600 Million of its Class A shares

Dropbox, Inc. announced financial results for its fourth quarter and fiscal year ended December 31, 2019.

“Our strong Q4 marked the end of an exciting year for Dropbox as we launched our vision for the smart workspace,” said co-founder and CEO Drew Houston. “We closed the year with more than $1.6 billion in revenue, over 450,000 Dropbox business teams, and millions of people using our new foreground app that keeps Dropbox at the center of our users’ workflows. Moving into 2020, I’m confident in the team we have on board and the opportunity ahead.”

4FQ19 Results
• Total revenue was $446.0 million, an increase of 19% from 3FQ18. On a constant currency basis, Y/Y growth would have been 20%.(1)
• Annual recurring revenue ended at $1.820 billion, an increase of 19% from 3FQ19.(2)
• Paying users ended at 14.3 million, as compared to 12.7 million as of 3FQ18. Average revenue per paying user was $125.00, as compared to $119.61 for 3FQ18.
• GAAP gross margin was 76.5%, as compared to 74.9% in 3FQ18. Non-GAAP gross margin was 77.6%, as compared to 75.7% in 3FQ18.
• GAAP operating margin was (1.5%), as compared to (3.2%) in 3FQ18. Non-GAAP operating margin was 15.6%, as compared to 11.0% in 3FQ18.
• GAAP net loss was ($6.6) million, as compared to ($9.5) million in 3FQ18. Non-GAAP net income was $67.4 million, as compared to $42.3 million in 3FQ18.
• Net cash provided by operating activities was $186.8 million, as compared to $123.7 million 3FQ18. Free cash flow was $161.3 million, as compared to $88.3 million in 3FQ18.
• GAAP basic and diluted net loss per share was ($0.02), as compared to ($0.02) in 3FQ18. Non-GAAP diluted net income per share was $0.16, as compared to $0.10 in 3FQ18.(3)
• Cash, cash equivalents and short-term investments were $1.159 billion at the end of 4FQ19, as compared to $1.089 billion for 3FQ18.

FY19 Results
• Total revenue was $1.661 billion, an increase of 19% Y/Y. On a constant currency basis, Y/Y growth would have been 21%.(1)
• Average revenue per paying user was $123.07, as compared to $117.64 in FY18.
• GAAP gross margin was 75.3%, as compared to 71.6% in the prior year. Non-GAAP gross margin was 76.4%, as compared to 75.1% in FY18.
• GAAP operating margin was (4.8%), as compared to (35.5%) in FY18. Non-GAAP operating margin was 12.3%, as compared to 12.2% in FY18.
• GAAP net loss was ($52.7) million, as compared to ($484.9) million in FY18. Non-GAAP net income was $207.0 million, as compared to $166.2 million in FY18.
• Net cash provided by operating activities was $528.5 million, as compared to $425.4 million in FY18. Free cash flow was $392.4 million as compared to $362.4 million in FY18.
• GAAP basic and diluted net loss per share was ($0.13), as compared to ($1.35) in FY18. Non-GAAP diluted net income per share was $0.50, as compared to $0.41 in FY18.(4)

Share Repurchase Authorization
On February 19, 2020, the board of directors authorized the company to repurchase up to $600 million of its Class A shares. The repurchase is expected to be executed, subject to general business and market conditions and other investment opportunities, through open market purchases or privately negotiated transactions, including through Rule 10b5-1 plans.

(1) Company calculates constant currency revenue growth rates by applying the prior period weighted average exchange rates to current period results.
(2) It calculates total annual recurring revenue (ARR) as the number of users who have active paid licenses for access to our platform as of the end of the period, multiplied by their annualized subscription price to our platform. It adjusts its exchange rates used to calculate total ARR on an annual basis, at the beginning of each fiscal year.
(3) Non-GAAP diluted net income (loss) per share is calculated based upon 417.9 million and 416.3 million diluted weighted-average shares of common stock for the three months ended December 31, 2019 and 2018, respectively.
(4) Non-GAAP diluted net income (loss) per share is calculated based upon 416.6 million and 409.8 million diluted weighted-average shares of common stock for the fiscal year ended December 31, 2019 and 2018, respectively.