When I finish writing it, this article, along with almost every other file I want to archive will be saved to the Dropbox folder on my laptop. From there it will quickly be automatically synced to the cloud. Last year my previous laptop packed in at one point, corrupted hard disk, and I had to have it repaired.
Because all of my important files had been stored to Dropbox I was able to drag out of storage an old desktop tower that hadn’t been used for a few years, hook it up to a monitor, power it up and be back to work with minimum interruption within a couple of hours. All I had to do was log into Dropbox, create a new desktop shortcut and I was able to access everything important that would otherwise have been lost to cyber-infinity along with the dead hard disk.
Earlier this year while playing football of an evening after work, the skies opened and a downpour of apocalyptic scale ensued. It turned out the bag I was using that day wasn’t very water resistant at all. This time it really was the end of the road for that particular trusty laptop. Again, while irritating, all I had to do to get back to work the next morning was pull the old desktop tower back out of the cupboard and log into Dropbox.
Most readers will have experienced the almighty disruption that ensued in years gone by when a laptop or desktop abruptly reached the end of the line, was stolen or the data stored on it otherwise became inaccessible. While the well-prepared, or those that had already encountered the inconvenience, might periodically back up files to an external hard disk, when disaster did occur there would almost always be some kind of loss of data. It was a pain. Dropbox and other cloud-based storage and file sharing alternatives, solved all of that. This service was an obvious market need and over the past several years using Dropbox, one of its competitors, or the more limited free cloud storage options of Microsoft and Google has become the norm.
Dropbox, the market leader in the space, went public in March of this year, listing on the Nasdaq, the favoured home for tech unicorns who IPO. Tech companies are notorious for seeing their post-IPO share price drop, either immediately or within a couple of months. They tend to be aggressively value at IPO. Some go on to recover strongly while others, think Twitter and Snapchat-parent Snap, don’t. Or at least take a long time to.
Dropbox, however, is a different tech beast to social media IPOs, that are often still at an immature stage of monetisation when they go public. While a freemium model, with users offered limited storage space and file sharing functionality for free, the service is based on a subscription model. Investors like the predictability and security subscription-based recurring revenues provide. As a result, Dropbox’s share price has done reasonably well since March. There has been a little volatility but going into yesterday’s preliminary results announcement, Dropbox’s share price was over 11.5% up on where it debuted back in March.
There’s a good chance those who invested through online stock brokers in Dropbox shares will see further gains after the company yesterday comfortably beat analyst forecasts. Key to the company’s growth prospects are how well it converts freemium users to a subscription model and results here were particularly pleasing. A total of 11.1 million subscribers had been forecast and 1.5 reported, a 24% net gain on the same quarter a year ago. Average revenue per user also beat forecasts by 1%, growing 3% rather than the 2% widely predicted, to reach $113.2.
Revenues also outperformed expectations with $316.3 booked to $309.2 forecast. Net losses did, however widen to $2.13 a share from just $0.17 a year ago, though the majority of this was the result of expenses associated with the IPO. With those stripped out, adjusted earnings per share of $0.08 beat the forecast for $0.05.
Dropbox outperformed analyst consensus on every major metric leading to chief executive Drew Houston to remark:
“2018 has already been a banner year for Dropbox, and we’re proud of our strong first quarter as a public company”.