Dropbox: Fiscal 1Q21 Financial Results

Dropbox, Inc. announced financial results for its first quarter ended March 31, 2021.

“We kicked off the year with a profitable Q1, along with strong revenue growth and free cash flow,” said co-founder and CEO Drew Houston. “We welcomed DocSend to the team, saw great momentum with HelloSign, and continued to make meaningful progress vs. our 2021 priorities. In this new era of distributed work, we have a big opportunity to deliver more value to our customers and shareholders, and I’m excited for what’s ahead.“

1FQ21 results

• Total revenue was $511.6 million, an increase of 12% from 1FQ20. On a constant currency basis, Y/Y growth would have been 11%.
• Total ARR ended at $2.112 billion, an increase of 13% from 1FQ20. On a constant currency basis, Total ARR grew $60.5 million quarter-over-quarter, and Y/Y growth would have been 12%.
• Paying users ended at 15.83 million, as compared to 14.59 million for 1FQ20. Average revenue per paying user was $132.55, as compared to $126.30 for 1FQ20
• GAAP gross margin was 78.6%, as compared to 77.3% in 1FQ20. Non-GAAP gross margin was 80.2%, as compared to 78.3% in 1FQ20.
• GAAP operating margin was 8.3%, as compared to 5.9% in 1FQ20. Non-GAAP operating margin was 29.1%, as compared to 16.1% in 1FQ20.
• GAAP net income was $47.6 million, as compared to $39.3 million in 1FQ20. Non-GAAP net income was $141.8 million, as compared to $69.8 million in 1FQ20.
• Net cash provided by operating activities was $115.7 million, as compared to $53.3 million in 1FQ20. Free cash flow was $108.8 million, as compared to $25.5 million in 1FQ20.
• GAAP basic and diluted net income per share attributable to common stockholders was $0.12, as compared to $0.09 in 1FQ20. Non-GAAP diluted net income per share attributable to common stockholders was $0.35, as compared to $0.17 in 1FQ20.
• Cash, cash equivalents and short-term investments ended at $1.916 billion.

During the quarter, the company completed an offering for $1.389 billion of zero-coupon convertible senior notes, which included the exercise of the over-allotment options. This consisted of $695.8 million of convertible senior notes that mature in 2026 and $693.3 million of convertible senior notes that mature in 2028. After deducting the net costs of related hedge and warrant transactions and certain offering expenses, total net proceeds from the offering were $1.305 billion.

DocSend acquisition
Dropbox completed the acquisition of DocSend, Inc., which enables companies to share business-critical documents with ease and get real-time actionable feedback, on March 22, 2021 for approximately $165 million, consisting primarily of cash payments, subject to customary purchase price adjustments. Of the approximately $165 million of consideration, $30.7 million is subject to ongoing employee service. The combination of Dropbox, HelloSign, and DocSend will help customers across industries manage end-to-end document workflows-from closing deals to onboarding teams-giving them more control over their business results.