Company Reports

We maintain our fair value estimate of $26 for no-moat Dropbox after the firm reported earnings for its first quarter of fiscal 2024. Persistent macro tightness kept budget scrutiny high among Dropbox’s customers, reaffirming the firm’s vulnerability to churn. In our view, Dropbox’s offerings do not embed themselves in their customers’ mission-critical operations, and the wide availability of substitutes continues to be a threat. However, we were encouraged to see the firm maintain high profitability as it continues to focus on operational discipline during a time of macrouncertainty. Following the earnings report, shares were trading up, and we view them as fairly valued.

In an increasingly digitized world, we believe that Dropbox is amid a transition from a cloud-storage pure play to a more holistic content collaboration platform. With acquisitions in the e-signature and document-sharing spaces, we believe no-moat Dropbox’s pivot away from cloud storage could provide the firm with economic tailwinds.

In an increasingly digitized world, we believe that Dropbox is amid a transition from a cloud-storage pure play to a more holistic content collaboration platform. With acquisitions in the e-signature and document-sharing spaces, we believe no-moat Dropbox’s pivot away from cloud storage could provide the firm with economic tailwinds.

We are raising our fair value estimate for no-moat Dropbox to $26 from $24 after the firm finished 2023 with financial results ahead of our prior forecasts. While macro pressures continue to affect Dropbox’s customers’ budgets negatively, we believe the firm’s increased emphasis on profitability during this increased macrouncertainty is the right move. At the same time, we believe that the macroimpact on Dropbox’s business further shows the lack of switching costs associated with its solutions with Dropbox customers cutting down their spend when their own budgets got squeezed. Unlike other software companies that are often mission-critical to their users’ workflows, Dropbox does not enjoy the same leverage over its customers. Despite the firm’s shares trading down following its earnings report, we view them as overvalued relative to our updated fair value estimate.

We maintain our $24 fair value estimate for no-moat Dropbox after the firm reported a strong third quarter against a tough macro backdrop. Dropbox’s customers, which are often individual users or small- to medium-sized businesses, or SMBs, tend to be price sensitive, especially during a time when their own budgets are being squeezed. While Dropbox has increased prices over the last year in a bid to drive sales forward, we believe Dropbox’s ability to take price action is limited due to the lack of abundant switching costs associated with its solutions. Unlike other software companies that are often mission-critical to their users’ workflows, Dropbox does not enjoy the same leverage over its customers. At the same time, we commend management’s decision to pivot away from commoditized cloud storage into areas such as document sharing, signatures, and team collaboration. We think that Dropbox could potentially develop switching costs for its customers if it offered a broader content collaboration platform. We think these results support our long-term thesis, and we view shares as marginally overvalued.

We maintain our $24 fair value estimate for no-moat Dropbox, after the firm reported second-quarter results which came in above our revenue and adjusted operating margin expectations. Management guided for sequentially stronger third-quarter sales and raised its full-year revenue and margin outlooks. Despite the strong results, macro headwinds continue to bear down on Dropbox’s financials with customers reticent to spend money on Dropbox’s solutions during a time when their own budgets are squeezed. At the same time, we are encouraged by the firm’s reallocation of resources toward strategic initiatives around artificial intelligence enablement and improving its core portfolio, including a pivot away from commoditized cloud storage. With shares up more than 4% after hours, we view Dropbox as fairly valued.

In an increasingly digitized world, we believe that Dropbox is amid a transition from a cloud-storage pure play to a more holistic content collaboration platform. With acquisitions in the high-growth e-signature and document-sharing spaces, we believe no-moat Dropbox’s pivot away from cloud storage could provide the firm with economic tailwinds.

We are lowering our fair value estimate for no-moat Dropbox to $24 from $26, as the firm reported first-quarter results that were slightly above our revenue expectations, and below our adjusted operating margin forecast. With macroeconomic headwinds and normalization following demand acceleration during the pandemic, we expect an overall slowdown in demand for Dropbox’s solution—pushing our fair value down as well. In order to offset headwinds, management highlighted its recent decision to reduce Dropbox’s workforce by 16%, as the firm redirects resources toward strategic initiatives around artificial intelligence enablement, improving its core portfolio and operational efficiency. With this, as well as anticipated currency headwinds, management reduced its revenue guidance and increased its bottom-line estimates for the full year. With shares trading up more than 7% after hours, we view Dropbox as fairly valued.

In an increasingly digitized world, we believe that Dropbox is amid a transition from a cloud-storage pure play to a more holistic content collaboration platform. With acquisitions in the high-growth e-signature and document-sharing spaces, we believe no-moat Dropbox’s pivot away from cloud storage could provide the firm with economic tailwinds.

We are maintaining our $26 fair value estimate for no-moat Dropbox as the firm checked off fiscal 2022 with a strong set of financial results, marginally above our expectations. Despite a tough macroeconomic backdrop, Dropbox’s top line continued to show resilience. We continue to have a positive view of Dropbox’s transition away from commoditized cloud storage by incorporating more content collaboration products into its arsenal. With a broader set of offerings, we believe the firm can unlock greater cross-selling opportunities along with more venues for new customers to land within Dropbox’s suite of offerings. With shares trading flat after hours, we view Dropbox as fairly valued.

We are maintaining our $26 fair value estimate for no-moat Dropbox as the firm closed out its third quarter with results largely in line with our expectations. Despite macroeconomic headwinds, primarily in the shape of a strengthening U.S. dollar, Dropbox continued to see top-line strength. Overall, we are pleased with Dropbox's transition from the commoditized cloud storage segment into the more holistic content collaboration platform segment. With a broader set of offerings and collaboration tools, we remain optimistic about the firm's average revenue per user and user additions. With shares trading flat afterhours, we view Dropbox as moderately undervalued.

In an increasingly digitized world, we believe that Dropbox is amid a transition from a cloud-storage pure play to a more holistic content collaboration platform. With acquisitions in the high-growth e-signature and document-sharing spaces, we believe no-moat Dropbox’s pivot away from cloud storage could provide the firm with economic tailwinds.

We are resuming coverage of no-moat Dropbox with a $26 fair value estimate. Shares appear slightly undervalued to us. Our long-term forecasts are unchanged, as we hold our view that the firm’s offerings as a content collaboration platform stands to benefit from secular tailwinds in an increasingly digitized world.

We are placing Dropbox under review and expect to resume coverage in the near future.

In an increasingly digitized world, we believe that Dropbox is amid a transition from a cloud-storage pure play to a more holistic content collaboration platform. With acquisitions in the high-growth e-signature and document-sharing spaces, we believe no-moat Dropbox’s pivot away from cloud storage could provide the firm with economic tailwinds.

We are lowering our fair value estimate for no-moat Dropbox to $26 from $30 per share as a result of slightly reduced topline growth projections. The firm’s second quarter financial results were largely in line with our expectations as upselling activity bolstered the firm’s topline. We continue to think that the market has been overly punitive on SaaS companies in recent months, including Dropbox. With shares trading around $22, we still see modest upside for long-term investors after the market selloff.

We are maintaining our $30 fair value estimate for no-moat Dropbox as the firm closed out 2021 with results largely in line with our expectations. Dropbox continued to see top line strength stemming from increased usage of its products and upselling activity. Overall, we are pleased with Dropbox's transition from the commoditized cloud storage space into greener pastures in the more holistic content collaboration platform space. With a broader set of offerings and collaboration tools, we remain optimistic about the firm's average revenue per user, or ARPU, and user additions. We continue to think that shares are undervalued with the market being overly punitive on SaaS companies in recent months. With shares trading around $23, we see potential upside for long-term investors looking for exposure in the content collaboration space.

In an increasingly digitized world, we believe that Dropbox is amid a transition from a cloud-storage pure play to a more holistic content collaboration platform. With acquisitions in the high-growth e-signature and document-sharing spaces, we believe no-moat Dropbox’s pivot away from cloud storage could provide the firm with economic tailwinds.

No-moat Dropbox finished off a solid third quarter with top and bottom lines exceeding our above-consensus estimates. Management also revised its year-end guidance upward, with the firm expecting continued revenue growth and improvements in its margin profile. Overall, we are pleased with Dropbox's transition from the commoditized cloud storage space into greener pastures in the more holistic content collaboration platform space. With a broader set of offerings and collaboration tools, we remain optimistic about the firm's average revenue per user and user additions. After modeling in near-term top-line strength, we are raising our fair value estimate to $30 per share from $26 per share. With shares currently trading around $31 per share, we see the stock as fairly valued.

In an increasingly digitized world, we believe that Dropbox is amid a transition from a cloud-storage pure play to a more holistic content collaboration platform. With acquisitions in the high-growth e-signature and document-sharing spaces, we believe no-moat Dropbox’s pivot away from cloud storage could provide the firm with economic tailwinds.