Why Dropbox Inc (NASDAQ: DBX) stock is crashing

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Dropbox Inc (NASDAQ: DBX) stock wiped 14% on August 9th, 2019 (as of 9 Aug, 12:14 pm GMT-4; Source: Google finance) as company has reported its slowest growth in paid users since going public last year. Net loss widened to $21.4 million, or 5 cents per share, for the second quarter ended June 30, from $4.1 million, or 1 cent per share, a year earlier.

DBX in the second quarter of FY 19 has reported the adjusted earnings per share of 15 cents, beating the analysts’ estimates for the adjusted earnings per share of 9 cents. The company had reported the adjusted revenue growth of 18 percent to $401.5 billion in the second quarter of FY 19, beating the analysts’ estimates for revenue of $401 billion. The revenue grew driven by paying user growth and ARPU expansion.

The company’s deferred revenue, which measures future business for subscription-based software vendors, rose 6.7% to$517.3 million, but was below estimates of $528.2 million, according to three analysts polled by Refinitiv. The number of paying users rose to 13.6 million from 13.2 million in the prior quarter and 11.9 million a year earlier. Analysts had expected 13.4 million paying users, according to FactSet. It reported average revenue per user of $120.48, which narrowly missed estimates of $120.8, according to IBES data from Refinitiv. The year over year ARPU expansion was primarily driven by strong adoption of the premium Professional and Advanced plans by new paying users. There was a modest sequential headwind to ARPU in Q2, driven by the timing of some large outbound deals.

Meanwhile, DBX have made great progress in integrating the company into the go-to-market efforts. In Q2, the company began offering 24/7 support for all of HelloSign’s Enterprise SKU customers globally. The company has also began testing a series of in-app marketing campaigns designed to drive awareness of HelloSign’s product capabilities and functionality to the large global installed base. And finally, the data science team has been experimenting with a model that identifies which Dropbox customers are most likely to use HelloSign.

Furthermore, in Q2, we also had a number of customer wins and team expansions across a range of verticals, including healthcare, construction, education and retail.

The company expects third-quarter revenue in the range of $421 million to $424 million, above analysts’ estimates of $419.2 million.


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