Dropbox: Fiscal 2Q22 Financial Results

(in $ million)	2Q21	2Q22	6 mo. 21	6 mo. 22
Revenue	530.6	572.7	1,042	1,135
*Growth*		8%		9%
Net income (loss)	88.0	62.0	135.6	141.7

Dropbox, Inc. announced financial results for its second quarter ended June 30, 2022.

“Our 2FQ22 results are a testament to the strength of our business and the value our product delivers to our customers, despite the unpredictable macro environment,” said co-founder and CEO Drew Houston. “We made great progress this quarter, enhancing performance and functionality in our core FSS product, releasing additional security and data protection capabilities, and expanding workflows, like Capture and Replay. We believe we’re operating from a position of strength to deliver value to shareholders, thanks to strong profitability and improved customer retention. I’m proud of the team’s discipline and execution, and excited for what’s ahead as we build one organized place for your cloud content and all the workflows around it.“

2FQ22 Results
• Total revenue was $572.7 million, an increase of 7.9% from 2FQ21. On a constant currency basis, Y/Y growth would have been 8.8%.
• Total ARR ended at $2.333 billion, an increase of $43.7 million Q/Q and an increase of 7.7% Y/Y. On a constant currency basis, Y/Y growth would have been 8.3%.
• Paying users ended at 17.37 million, as compared to 16.14 million for 2FQ21. Average revenue per paying user was $133.34, as compared to $133.15 for 2FQ21.
• GAAP gross margin was 81.5%, as compared to 79.8% for 2FQ21. Non-GAAP gross margin was 83.0%, as compared to 81.2% for 2FQ21.
• GAAP operating margin was 14.5%, as compared to 15.9% for 2FQ21. Non-GAAP operating margin was 31.9%, as compared to 31.9% for 2FQ21.
• GAAP net income was $62.0 million, as compared to $88.0 million for 2FQ21. Non-GAAP net income was $138.1 million, as compared to $160.5 million for 2FQ21. The company’s GAAP and non-GAAP net income declined Y/Y as a result of a significant increase in income tax expense due to the impact of new R&D tax legislation.
• Net cash provided by operating activities was $209.9 million, as compared to $219.9 million for 2FQ21. Free cash flow was $205.9 million, as compared to $216.0 million for 2FQ21.
• GAAP diluted net income per share attributable to common stockholders was $0.17, as compared to $0.22 for 2FQ21. Non-GAAP diluted net income per share attributable to common stockholders was $0.38, as compared to $0.40 in 2FQ21.
• Cash, cash equivalents and short-term investments ended at $1.446 billion.

Comments

Total revenue for the quarter increased 7.9% Y/Y and 2% Q/Q to $572.7 million, beating guidance range of $568 million to $571 million.

Total ARR for the quarter grew 7.7% Y/Y at $2.333 billion.

3FQ22 guidance
Revenue between $584 and $587 million

FY22 guidance
Due to the significant strengthening of the US dollar since last update, the firm is revising its as-reported revenue guidance range down by $12 million, to $2.308 billion to $2.318 billion from previous guidance range of $2.320 billion to $2.330 billion.

Dropbox remains committed to its long-term objectives, including delivering operating margins of 30% to 32% and generating annual free cash flow of $1 billion by 2024.

Fiscal period

Revenue
in $ million

Y/Y growth

Net loss
in $ million

2015

603.8

(352.9)

2016

844.8

40%

(210.2)

2017