Dropbox: Fiscal 3Q24 Financial Results

Dropbox, Inc. announced financial results for its third quarter ended September 30, 2024.

“As we’ve shared over the last year, we’re in a transitional period as a company and we continue to face a challenging environment in 2024. We recently announced a reduction in our workforce to both increase efficiency in and strengthen our core business, and accelerate growth in our new bets, like Dropbox Dash,” said co-founder and CEO Drew Houston. “As the market opportunity heats up, we can leverage our large installed base, trusted brand, and scaled infrastructure to deliver on our next phase of growth. I’m excited about the opportunity to reimagine how we solve our customers’ biggest problems for the cloud-native, AI-powered world.“

3FQ24 Results

• Total revenue was $638.8 million, an increase of 0.9% from the same period last year on an as reported and constant currency basis.
• Total ARR was $2.579 billion, an increase of 2.1% from 3FQ23. On a constant currency basis, Y/Y growth would have been 1.4%. Total ARR increased $5.8 million Q/Q.
• Paying users was 18.24 million, as compared to 18.17 million for 3FQ23. Average revenue per paying user was $139.05, as compared to $138.71 for 3FQ23. Paying users increased 19,000 Q/Q.
• GAAP gross margin was 82.5%, as compared to 81.1% for 3FQ23. Non-GAAP gross margin was 84.0%, as compared to 82.6% for 3FQ23.
• Effective January 1, 2024, the company changed the estimate of the useful lives of certain infrastructure server and component assets, which are included in property and equipment, net and are depreciated through cost of revenue, from 4 to 5 years. The effect of this change in estimate during 3FQ24 was a reduction in depreciation expense of $6.9 million.
• GAAP operating margin was 20.0%, as compared to 20.6% for 3FQ23. Non-GAAP operating margin was 36.2%, as compared to 36.0% for 3FQ23.
• GAAP net income was $106.7 million, as compared to $114.1 million for 3FQ23.
• Non-GAAP net income was $190.4 million, as compared to $194.1 million 3FQ23.
• Net cash provided by operating activities was $274.2 million, as compared to $255.9 million for 3FQ23. Free cash flow was $270.1 million, as compared to $246.5 million for 3FQ23.
• GAAP diluted net income per share attributable to common stockholders was $0.34, as compared to $0.33 in 3FQ23. Non-GAAP diluted net income per share attributable to common stockholders was $0.60, as compared to $0.56 in 3FQ23.
• Cash, cash equivalents and short-term investments ended at $890.8 million.

Guidance:

• $637-$640 GAAP revenue for 4FQ24
• $2,542-$2,545 GAAP revenue for FY24