GAAP operating margins are significantly lower, as can be seen below, and as is common with many technology companies, the reason is mostly share-based compensation. Multiplying the two, we get the annual recurring revenue, which currently stands at a little above $2.2 billion per year.ĭespite offering the service to most users for free, the company has managed to post very impressive financials, such as >80% Non-GAAP gross margin, >30% Non-GAAP operating margin, and it is targeting $1 billion in free cash flow by 2024.
The average revenue per paying user has also modestly increased from ~$123 in 2019 to about $133 now. In 2019, there were ~14.3 million, so the company has gained a few million since IPO. Therefore, the number of paying users is a key metric, and it has been trending up. Most of Dropbox's 700 million+ users utilize the service for free, but fortunately for the company, there are ~17 million that have signed up for one of the paying options. The foundation of the Dropbox business model is the freemium approach, where the service is mostly free, but users can opt in to pay for additional features. It also has a few new products that could start contributing very meaningfully to the top line, particularly its e-signature solution HelloSign. We'll see how it has performed on a number of metrics, and while the company has perhaps not delivered as much as it potentially could have delivered, it is a more profitable company compared to the Dropbox at IPO.
The reason for this is simple, it went public at a very high valuation, and it has taken four years for its fundamentals to catch on with the actual price. It currently trades for ~$20.65 four years later, despite massive improvements to its financials. Funky-data/iStock Unreleased via Getty Imagesĭropbox ( NASDAQ: DBX) IPO'ed in March 2018, going public at $21 per share and opening at $29.
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