DBX Q4 Earnings Beat Estimates, Stock Falls on Slow Revenue Growth

Core Insights - Dropbox (DBX) reported fourth-quarter 2024 non-GAAP earnings of 73 cents per share, exceeding the Zacks Consensus Estimate by 17.74% and marking a 46% increase year over year [1] - The company experienced a revenue increase of 1.4% year over year, totaling $643.6 million, which also surpassed the consensus estimate by 0.79$2.574 billion, reflecting a 2% year-over-year growth [2] Financial Performance - DBX's earnings have consistently beaten the Zacks Consensus Estimate over the past four quarters, with an average earnings surprise of 13.33% [2] - The company reported a non-GAAP gross margin of 83.1%, up 80 basis points year over year, and a non-GAAP operating margin of 36.9%, which is an increase of 470 basis points year over year [5] - Research and development expenses decreased by 10.4% year over year to $142.4 million, while sales and marketing expenses fell by 3.8$106.9 million [5] User Metrics - As of the end of the fourth quarter, Dropbox had 18.22 million paying users, a slight sequential decline of approximately 15,000 users [4] - The average revenue per paying user (ARPU) increased to $140.06 from$138.83 in the same quarter last year, driven by higher-priced offerings and favorable foreign exchange trends [4] Cash Flow and Share Repurchase - As of December 31, 2024, Dropbox had cash, cash equivalents, and short-term investments totaling $1.59 billion, a significant increase from$890.8 million as of September 30, 2024 [6] - The company generated $213.8 million in cash from operating activities during the quarter and reported free cash flow of$210.5 million [6] - Dropbox repurchased 12.5 million shares for $350.4 million, with$1.4 billion remaining under existing share repurchase authorizations [7] Guidance - For the first quarter of 2025, Dropbox expects revenues between $618 million and$621 million, with a non-GAAP operating margin projected at 38.5% [9] - For the full year 2025, the company anticipates revenues between $2.465 billion and$2.480 billion [9] - The expected gross margin for the year is 82%, with a non-GAAP operating margin forecasted between 37.5% and 38% [10]