Increase in user base
In the previous part, we saw that Dropbox (DBX) increased its paid subscriber base by 400,000 in the second quarter to 11.9 million. The average revenue per user rose from $111.19 to $116.66 year-over-year in the second quarter. At the time of Dropbox’s IPO, the company stated that its total user base was around 500 million, which indicates that Dropbox has monetized less than 2.5% of its user base.
Dropbox also claimed that it has identified 300 million users that are likely to convert to a paid subscription. If Dropbox can grow its paid user base by over 600,000 per quarter, its stock could rise.
While the growth potential is tremendous, Dropbox competes with tech giants such as Amazon (AMZN), Google (GOOG) (GOOGL), and Microsoft (MSFT) in the cloud storage space. These companies have large cash reserves and are willing to enter into a price war to expand user base. Dropbox aims to leverage artificial intelligence and machine learning capabilities to identify potential customers and match them with a suitable subscription plan.
Partnership with Zoom
Last month, Dropbox announced a partnership with Zoom Video Communications to expand remote collaboration for users. The two companies have developed cross-platform features that enable real-time communication around Dropbox’s shared content, which could enhance teamwork productivity.
Dropbox is also looking to make a strategic investment in Zoom to support integrated product experiences.