What To Expect From Dropbox’s First Earnings Report

Morning Report: Today Dropbox will report earnings as a public company for the first time. Here’s what to expect.

Recent mega-unicorn IPO Dropbox will pass an important gauntlet today. The popular file storage and collaboration shop will report its first set of quarterly earnings as a public company.

Shares of Dropbox were up over 1.5 percent in midday trading ahead of the report. Worth $31.86 per share as of the time of writing, the company is valued sharply higher than its $21 per share IPO price.

Here is what you can expect when it drops its latest numbers:

• Revenue, profit. According to numerous publications, Dropbox should report an adjusted per-share profit of $0.04 and $309.3 million in revenue. In the year-ago quarter, the firm generated a $247.9 million in top line. If Dropbox precisely matches expectations, it will grow by just under 25 percent.
• Losses. Dropbox will lose a pile of money in the quarter. As MarketWatch’s Max Cherney reported earlier this week, companies that just went public bear heavy stock vesting costs. Dropbox will take the stick for that, making its adjusted per-share profit the real line item to grok in its first report.
• Big items. Paying users will be key, per the Wall Street Journal. The percent growth of paying users will mimic the company’s broad top-line growth, the Journal says, which also notes that Dropbox “likely generated $113.20 from each user on average last quarter, up about 2% from a year ago” per an analyst.

Also on the agenda: cash generation, cash position, gross margin expansion or contraction, and the company’s resulting revenue multiple. If that list seems long, it’s because Dropbox not only wants to impress during its first earnings report, it’s also because the company is currently priced by great expectations.

We can see that in its multiples.

Yahoo Finance has Dropbox’s current, trailing revenue multiple at nearly 11.5. That’s very steep by current standards—nearly double what many public SaaS companies enjoy—implying that Dropbox has something special to make it worth more per dollar of revenue it generates than other cloud shops. For Dropbox, that special something has been its positive cash generation and steady revenue growth past the $1 billion yearly mark. It will need to keep both those moving if it wants to protect its multiple.

More this afternoon!

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