Dropbox: Fiscal 3Q22 Financial Results

(in $ million)	3Q21	3Q22	9 mo. 21	9 mo. 22
Revenue	550.2	591.0	1,592	1,726
*Growth*		7%		8%
Net income (loss)	75.6	83.2	221.2	224.9

Dropbox, Inc. announced financial results for its third quarter ended September 30, 2022.

“We delivered another strong quarter amidst an increasingly challenging macroeconomic backdrop,” said co-founder and CEO Drew Houston. “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. 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.“

3FQ22 Results
Revenue was $591.0 million, an increase of 7.4% from 3FQ21. On a constant currency basis, yearly growth would have been 9.7%.

Total ARR ended at $2.431 billion, an increase of $98.0 million Q/Q and an increase of 9.6% Y/Y. On a constant currency basis, Y/Y growth would have been 10.2%.

Paying users ended at 17.55 million, as compared to 16.49 million for 3FQ21. Average revenue per paying user was $134.31, as compared to $133.79 for 3FQ21.

GAAP gross margin was 81.4%, as compared to 79.6% for 3FQ21. Non-GAAP gross margin was 82.9%, as compared to 81.0% for 3FQ21.

GAAP operating margin was 15.1%, as compared to 14.0% for 3FQ21. Non-GAAP operating margin was 31.6%, as compared to 29.3% for 3FQ21.

GAAP net income was $83.2 million, as compared to $75.6 million for 3FQ21. Non-GAAP net income was $153.1 million, as compared to $147.1 million for 3FQ21.

Net cash provided by operating activities was $251.4 million, as compared to $231.5 million for 3FQ21. Free cash flow was $245.2 million, as compared to $221.5 million for 3FQ21.

GAAP diluted net income per share attributable to common stockholders was $0.23, as compared to $0.19 for 3FQ21. Non-GAAP diluted net income per share attributable to common stockholders was $0.43, as compared to $0.37 in 3FQ21.

Cash, cash equivalents and short-term investments ended at $1.453 billion.

Comments

Revenue for the quarter was $591 million, up 7.4% Y/Y and 3% Q/Q, beating guidance between $584 and $587 million announced in 2FQ22.

Drew Houston commented: "We saw strength from our teams plans driven by pricing and packaging changes, which we rolled out in June. And the strength was partially offset by some continued moderation in our document workflow businesses which I touched on last quarter, along with some recent softness with our Plus individual SKU, particularly in mobile."

The company expects GAAP revenue of $592-$595 million for 4FQ22, up 5% Y/Y, and $2,318-$2,321 million for FY22, up between 7% and 8% from FY21.

Fiscal period

Revenue
in $ million

Y/Y growth

Net loss
in $ million

2015

603.8

(352.9)

2016

844.8

40%

(210.2)

2017

1,107

13%

(111.7)

2018

1,392

26%

(484.9)

2019

1,661

19%

(52.7)

2020

1,914

15%

(256.3)

1Q21

511.6

12%

47.6

2Q21

530.6

14%

88.0

3Q21

550.2

13%

75.6

4Q21

565.5

12%

124.6

FY21

2,158

13%

335.8

1Q22

562.4

10%

79.7

2Q22

572.7

62.0

3Q22

591.0

83.2

4FQ22 (estim.)

592-595

FY22 (estim.)

2.318-2,321

7%-8%