What’s Limiting Dropbox’s Revenue Growth



Dropbox’s revenue grew 23%

File storage company Dropbox (DBX) announced its fourth-quarter earnings on February 21. Its revenue rose 23.0% YoY (year-over-year) to $375.9 million during the quarter, beating Wall Street’s estimate of $370 million. Dropbox’s net loss improved YoY to $9.5 million from $37.7 million, and its gross margin improved YoY to 74.9% from 70%.

Article continues below advertisement

Dropbox’s paid users still comprise a very small portion of its user base

Dropbox’s paying user base grew 15.4% YoY to 12.7 million during the quarter, beating analysts’ estimate of 12.5 million. The company was also able to eke out more revenue per user, $119.61, compared with $113.39 in the same quarter in 2017, and $118.60 in the third quarter.

A major challenge facing Dropbox is that its paid users, which comprise most of its revenue, still make up less than 3% of its total user base. The company has been able to grow that number, but the growth has been slow. Dropbox may have to offer additional capabilities to attract more users to paid subscriptions. To that end, the company recently acquired HelloSign, which helps scan, edit, and sign documents.


More From Market Realist