Dropbox Inc (NASDAQ: DBX) stock surged over 5.7% on November 9th, 2018 (as of 10:18 AM GMT-5; Source: Google finance) after the company beats earnings and revenue expectations for third quarter 2018. By the end of the September quarter, Dropbox had 12.3 million paying customers, an 18% increase from the year-earlier quarter. The company’s paying customer base is driven by conversions to its individual and team plans. Unlike many of its peers, Dropbox attracts new customers through its self-serve products that rely on word of mouth, among other things to draw in new customers. Dropbox said that each customer was worth more, as average revenue per customer was up to $118.60 from $112.05 in the same quarter last year. In the past, the company has said it has over 500 million registered users and about 300 million of those are potential paying customers. Net cash provided by operating activities was $128.0 million, as compared to $111.5 million in the same period last year. Free cash flow was $120.0 million, as compared to $108.3 million in the same period last year. Cash, cash equivalents and short-term investments were $1,039.1 million at the end of the third quarter of 2018.
DBX in the third quarter of FY 18 has reported the adjusted earnings per share of 7 cents, while adjusted revenue growth of 26 percent to $360.3 million in the third quarter of FY 18. The top-line growth was driven by continued paid-user conversions and the additional revenue it was able to generate from each customer. Free cash flow was $120 million and gross margins widened to 75.9% from 68.1% the year before.
Dropbox expects fourth-quarter sales of $367 million to $370 million. According to FactSet, Wall Street expected revenue of $363.7 million. Dropbox has raised its full-year guidance from a range of $1.36 billion to $1.37 billion, to $1.38 billion to $1.39 billion. The FactSet consensus for was full-year sales of $1.37 billion
Meanwhile, DBX strengthened its global collaboration platform by announcing partnerships and integrations that will give Dropbox Business customers access to more of the advanced security features they’ve been asking for. Dropbox is partnering with Google Cloud Identity, BetterCloud, Coronet, Proofpoint, and SailPoint, all of which have built integrations to support Dropbox Business. Dropbox With integrations among these new partner capabilities, admins can more easily control identity access, govern data, manage devices, and oversee security processes when employees and teams use Dropbox