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DBX

Dropbox NasdaqGS:DBX Stock Report

Last Price

US$20.72

Market Cap

US$7.4b

7D

3.0%

1Y

-29.6%

Updated

02 Oct, 2022

Data

Company Financials +
DBX fundamental analysis
Snowflake Score
Valuation6/6
Future Growth2/6
Past Performance3/6
Financial Health2/6
Dividends0/6

DBX Stock Overview

Dropbox, Inc. provides a content collaboration platform worldwide.

Dropbox Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Dropbox
Historical stock prices
Current Share PriceUS$20.72
52 Week HighUS$31.47
52 Week LowUS$19.07
Beta0.85
1 Month Change-2.13%
3 Month Change-5.39%
1 Year Change-29.62%
3 Year Change6.42%
5 Year Changen/a
Change since IPO-27.25%

Recent News & Updates

Sep 19
What Does Dropbox, Inc.'s (NASDAQ:DBX) Share Price Indicate?

What Does Dropbox, Inc.'s (NASDAQ:DBX) Share Price Indicate?

Dropbox, Inc. ( NASDAQ:DBX ), is not the largest company out there, but it saw a decent share price growth in the teens...

Sep 06

Dropbox: Slowing Growth? So What!

Summary Dropbox H1 2022 results were disappointing with slowing revenue and Free Cash Flow growth, and limited future growth prospects. The market has been unjustifiable harsh to the stock, now trading at a forward P/E of just 13.8 and ~10x Free Cash Flow. Competition is the main risk factor, but the last 5 years have shown Dropbox's competitive resilience. Dropbox (DBX) stock has underperformed the broader tech-market over the last year, which may come as a surprise since Dropbox generates robust free cash flow, which should favor the stock in times of interest hikes and market rotation towards value stocks. However, while the advanced profitability is undoubtedly appealing, growth has slowed down significantly and is expected to decelerate even more in H2 2022. When I first initiated my a rating for Dropbox stock in September 2021, I spoke of a hybrid relationship between growth and value, which is now heavily skewed towards the value aspect of the argument. I remain bullish on the stock mainly due to Dropbox's ability to generate free cash flow and smart value realization on the side of management in the form of share buybacks and M&A. However, I lower my rating from "strong buy" to "buy," primarily because of weaker-than-expected revenue growth that is well below the industry average. I now expect Dropbox to be fairly valued at $27.12, with an upside of 28.1% in the base case. On August 4th, 2022, Dropbox released quarterly results for its second quarter, which ended June 30th. Dropbox's Q2 results were a preview of what is to come with both revenue and Free Cash Flow growth decelerating from the previous year. In summary, revenue came in at $572.7 million, an increase of 7.7% YoY compared to 13.5% growth in Q2 2021. Free Cash Flow for Q2 came in at $205.9 million, compared to $216.0 million the year before, a decrease of ~$ 10 million YoY. Standalone, these results would offer little positives for Dropbox stock. However, the results were significantly impacted by currency headwinds and lost revenue in Russia. Adjusted for these results, revenue growth would have been 8.8%. So, in conclusion, revenue is decelerating, but not as fast as suggested in the first place. DBX data by YCharts Is Dropbox a value stock? When speaking of a value stock in this context, I refer to a stock with low-digit growth prospects but operates profitable, and its intrinsic value based on Free Cash Flow suggests that its share price is undervalued. In the past, my main value proposition for the company evolved around the thesis that Dropbox would remain at a growth rate above 10% for at least the next 2-3 years, which at the time to me appeared realistic as revenue had just grown 13.5%. I expected that growing segments like e-Signature in the form of HelloSign and document analytics with DocSend would smoothen out the expected deceleration in Dropbox's core cloud product. It is fair to say that my expectations in this regard have been wrong. While the amount of new paying users has remained relatively stable over the observed timeframe at around 300 thousand added quarter-over-quarter, average revenue per user (ARPU) has fallen from $134.78 in Q4 2021 to $133.34, which helps explain the recent decline in revenue growth. The reasons for the decline in ARPU are probably manifold. Management mentioned in its Q2 earnings call that higher adoption of the family plan and subsequently lower margins would drive this decline. While logical and most certainly influencing the mentioned decline in ARPU, I assume that increased competitive pressure also plays a part in this, with more services being bundled and margins decreasing. Dropbox Overview (Dropbox Investor Presentation) Competition The lingering threat of the three big competitors, namely Google (GOOG) (GOOGL), Microsoft (MSFT), and Apple (AAPL) itself, poses an argument against investing in Dropbox since competition poses the single biggest threat in terms of growth and survivability for the company for the next 5-10 years. While the prospects of an acquisition have emerged recently, personally, besides Adobe (ADBE) or Oracle (ORCL), I do not see a feasible acquisition case. Unlike Slack, which Salesforce (CRM) acquired in 2021, Apple, Microsoft, and Google would all make an appealing acquisition case if they had not already offered their services. Consequently, Dropbox will have to differentiate itself because, in terms of marketing budgets and the product range, they stand no chance against the likes of Microsoft. On a more positive note, they are on a decent track to achieve just that, as, despite my earlier comments on the new products not yet being able to buffer decelerating demand in the core product, HelloSign and DocSend have shown tremendous growth, as reiterated by CEO Drew Housten in the Q2 earnings call. Dropbox Investor Presentation With all that in mind, I find the argument of competitive destruction by the big three so far unsupported in that competition has been around for five years, and Dropbox has remained among the market leaders. Further, while I expect Dropbox to lose market share in the private cloud market over the next five years, overall market growth is forecasted to grow by 17.9% p.a. As such, the percentage of the overall market may decrease relatively but grow absolutely. Valuation While the growth prospects appear limited, I believe the stock has been hit harder than what is justifiable, with the stock trading at a forward P/E multiple of just 13.84. In the Q2 Earnings Call, management has once more reiterated its 2024 target model of generating $1 billion in Free Cash Flow, which, based on current market capitalization, would have the stock trading at an 8x Cash Flow multiple. For reference, the average Free Cash Flow multiple for software companies is 25x, and Microsoft trades at 75x its Free Cash Flow. For my valuation, I have been relatively conservative in my calculation of the cost of capital at 7.5%, primarily due to a higher risk-free rate and an increased risk premium based on the abovementioned risks. In terms of revenue, I have Dropbox growing at 6.1% p.a. and maintaining an operating margin of 30-32% over the duration, reaching 31.5% for the terminal value calculation. My estimate of 1.5% for the perpetuity growth rate in the base case stems from the assumption that after 2026 growth will slow even further. As such, a lower-than-usual perpetuity growth rate of 1.5% is, in my opinion, justified. Based on these assumptions, I get a fair value of $27.12 and an upside of 28.1% in the base case, with the fair value range between $22.56 and $32.31, respectively, for the low-end and the high-end of the spectrum.

Shareholder Returns

DBXUS SoftwareUS Market
7D3.0%-1.3%-2.5%
1Y-29.6%-33.2%-23.2%

Return vs Industry: DBX exceeded the US Software industry which returned -33.2% over the past year.

Return vs Market: DBX underperformed the US Market which returned -23.2% over the past year.

Price Volatility

Is DBX's price volatile compared to industry and market?
DBX volatility
DBX Average Weekly Movement4.2%
Software Industry Average Movement8.7%
Market Average Movement6.8%
10% most volatile stocks in US Market15.5%
10% least volatile stocks in US Market2.8%

Stable Share Price: DBX is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: DBX's weekly volatility (4%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
20072,667Drew Houstonhttps://www.dropbox.com

Dropbox, Inc. provides a content collaboration platform worldwide. Its platform allows individuals, families, teams, and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan for premium features. As of December 31, 2021, the company had approximately 700 million registered users.

Dropbox Fundamentals Summary

How do Dropbox's earnings and revenue compare to its market cap?
DBX fundamental statistics
Market CapUS$7.42b
Earnings (TTM)US$341.90m
Revenue (TTM)US$2.25b

21.7x

P/E Ratio

3.3x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
DBX income statement (TTM)
RevenueUS$2.25b
Cost of RevenueUS$446.50m
Gross ProfitUS$1.80b
Other ExpensesUS$1.46b
EarningsUS$341.90m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)0.96
Gross Margin80.16%
Net Profit Margin15.19%
Debt/Equity Ratio-252.8%

How did DBX perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is DBX undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

6/6

Valuation Score 6/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for DBX?

Other financial metrics that can be useful for relative valuation.

DBX key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue3.7x
Enterprise Value/EBITDA16.5x
PEG Ratio2.1x

Price to Earnings Ratio vs Peers

How does DBX's PE Ratio compare to its peers?

DBX PE Ratio vs Peers
The above table shows the PE ratio for DBX vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average49.9x
OTEX Open Text
17.7x11.2%US$7.0b
BSY Bentley Systems
92.4x22.0%US$9.5b
MANH Manhattan Associates
70.3x10.2%US$8.3b
BKI Black Knight
19.3x-15.2%US$10.0b
DBX Dropbox
21.7x10.4%US$7.4b

Price-To-Earnings vs Peers: DBX is good value based on its Price-To-Earnings Ratio (21.7x) compared to the peer average (49.9x).


Price to Earnings Ratio vs Industry

How does DBX's PE Ratio compare vs other companies in the US Software Industry?

Price-To-Earnings vs Industry: DBX is good value based on its Price-To-Earnings Ratio (21.7x) compared to the US Software industry average (39.2x)


Price to Earnings Ratio vs Fair Ratio

What is DBX's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

DBX PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio21.7x
Fair PE Ratio31.5x

Price-To-Earnings vs Fair Ratio: DBX is good value based on its Price-To-Earnings Ratio (21.7x) compared to the estimated Fair Price-To-Earnings Ratio (31.5x).


Share Price vs Fair Value

What is the Fair Price of DBX when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: DBX ($20.72) is trading below our estimate of fair value ($69.73)

Significantly Below Fair Value: DBX is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price and analysts are within a statistically confident range of agreement.


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Future Growth

How is Dropbox forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


10.4%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: DBX's forecast earnings growth (10.4% per year) is above the savings rate (1.9%).

Earnings vs Market: DBX's earnings (10.4% per year) are forecast to grow slower than the US market (14.8% per year).

High Growth Earnings: DBX's earnings are forecast to grow, but not significantly.

Revenue vs Market: DBX's revenue (4.4% per year) is forecast to grow slower than the US market (7.7% per year).

High Growth Revenue: DBX's revenue (4.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: DBX's Return on Equity is forecast to be very high in 3 years time (71%).


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Past Performance

How has Dropbox performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


48.3%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: DBX has high quality earnings.

Growing Profit Margin: DBX became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: DBX has become profitable over the past 5 years, growing earnings by 48.3% per year.

Accelerating Growth: DBX has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: DBX has become profitable in the last year, making it difficult to compare its past year earnings growth to the Software industry (13.4%).


Return on Equity

High ROE: DBX's liabilities exceed its assets, so it is difficult to calculate its Return on Equity.


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Financial Health

How is Dropbox's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: DBX has negative shareholder equity, which is a more serious situation than short term assets not covering short term liabilities.

Long Term Liabilities: DBX has negative shareholder equity, which is a more serious situation than short term assets not covering long term liabilities.


Debt to Equity History and Analysis

Debt Level: DBX has negative shareholder equity, which is a more serious situation than a high debt level.

Reducing Debt: DBX's has negative shareholder equity, so we do not need to check if its debt has reduced over time.

Debt Coverage: DBX's debt is well covered by operating cash flow (54.3%).

Interest Coverage: DBX's interest payments on its debt are well covered by EBIT (77.9x coverage).


Balance Sheet


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Dividend

What is Dropbox current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

Dropbox Dividend Yield vs Market
How does Dropbox dividend yield compare to the market?
SegmentDividend Yield
Company (Dropbox)n/a
Market Bottom 25% (US)1.7%
Market Top 25% (US)4.7%
Industry Average (Software)1.1%
Analyst forecast in 3 Years (Dropbox)0%

Notable Dividend: Unable to evaluate DBX's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate DBX's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.


Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if DBX's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if DBX's dividend payments have been increasing.


Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as DBX has not reported any payouts.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

3.3yrs

Average management tenure


CEO

Drew Houston (39 yo)

15.33yrs

Tenure

US$1,515,269

Compensation

Mr. Andrew W. Houston, also known as Drew, co-founded Dropbox Inc. and has been its Chief Executive Officer and Director since June 2007 also serves as its Chairman. He served as President of Dropbox Inc....


CEO Compensation Analysis

Drew Houston's Compensation vs Dropbox Earnings
How has Drew Houston's remuneration changed compared to Dropbox's earnings?
DateTotal Comp.SalaryCompany Earnings
Jun 30 2022n/an/a

US$342m

Mar 31 2022n/an/a

US$368m

Dec 31 2021US$2mUS$606k

US$336m

Sep 30 2021n/an/a

-US$135m

Jun 30 2021n/an/a

-US$177m

Mar 31 2021n/an/a

-US$248m

Dec 31 2020US$1mUS$588k

-US$256m

Sep 30 2020n/an/a

US$83m

Jun 30 2020n/an/a

US$33m

Mar 31 2020n/an/a

-US$6m

Dec 31 2019US$1mUS$700k

-US$53m

Sep 30 2019n/an/a

-US$56m

Jun 30 2019n/an/a

-US$44m

Mar 31 2019n/an/a

-US$27m

Dec 31 2018US$1mUS$675k

-US$485m

Sep 30 2018n/an/a

-US$513m

Jun 30 2018n/an/a

-US$521m

Mar 31 2018n/an/a

-US$544m

Dec 31 2017n/an/a

-US$112m

Sep 30 2017n/an/a

-US$103m

Jun 30 2017n/an/a

-US$132m

Mar 31 2017n/an/a

-US$174m

Dec 31 2016US$538kUS$325k

-US$210m

Compensation vs Market: Drew's total compensation ($USD1.52M) is below average for companies of similar size in the US market ($USD8.66M).

Compensation vs Earnings: Drew's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: DBX's management team is considered experienced (3.3 years average tenure).


Board Members

Experienced Board: DBX's board of directors are considered experienced (3.2 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

NasdaqGS:DBX Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
15 Nov 21SellUS$27,637,953Andrew HoustonIndividual1,036,216US$26.67

Ownership Breakdown

What is the ownership structure of DBX?
Owner TypeNumber of SharesOwnership Percentage
Private Companies27,1780.008%
State or Government118,5710.03%
General Public31,167,4498.7%
Individual Insiders94,635,41926.4%
Institutions231,939,82264.8%

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Top 25 shareholders own 69.15% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
25.62%
Andrew Houston
91,692,582$1.9b0%no data
8.63%
The Vanguard Group, Inc.
30,891,132$640.1m-0.56%0.01%
5.35%
BlackRock, Inc.
19,144,386$396.7m-6.25%0.01%
4.53%
Columbia Management Investment Advisers, LLC
16,195,638$335.6m5.76%0.1%
3.01%
Pictet Asset Management Limited
10,767,550$223.1m0.61%0.2%
2.68%
Renaissance Technologies LLC
9,580,233$198.5m16.69%0.25%
2.19%
The Baupost Group, L.L.C.
7,819,924$162.0m-26.03%2.54%
1.66%
State Street Global Advisors, Inc.
5,954,420$123.4m-11.79%0.01%
1.42%
UBS Asset Management
5,069,563$105.0m3.06%0.02%
1.29%
Citadel Advisors LLC
4,620,734$95.7m1428.49%0.15%
1.26%
Thrivent Investment Management, Inc.
4,495,097$93.1m32.44%0.25%
1.24%
Two Sigma Advisers, LP
4,431,600$91.8m-14.29%0.27%
1.23%
Eaton Vance Management
4,417,977$91.5m4.8%0.03%
1.03%
First Trust Advisors LP
3,700,827$76.7m-26.16%0.09%
1.02%
Geode Capital Management, LLC
3,641,760$75.5m-6.03%0.01%
0.88%
FMR LLC
3,142,851$65.1m-0.58%0.01%
0.84%
Janus Henderson Group plc
3,015,745$62.5m12.07%0.04%
0.72%
The Glenmede Trust Company, National Association
2,570,436$53.3m-0.55%0.32%
0.71%
Deutsche Asset & Wealth Management
2,526,200$52.3m25.45%0.02%
0.7%
Jacobs Levy Equity Management Inc
2,522,985$52.3m-3.62%0.42%
0.67%
Charles Schwab Investment Management, Inc.
2,415,010$50.0m-1.49%0.01%
0.65%
Loomis Sayles & Company, L.P.
2,331,612$48.3m-4.55%0.09%
0.63%
Greenhouse Funds LLLP
2,265,267$46.9m2.52%5.64%
0.62%
Morgan Stanley, Investment Banking and Brokerage Investments
2,207,711$45.7m113.06%0.01%
0.58%
Massachusetts Financial Services Company
2,067,600$42.8m17.48%0.01%

Company Information

Dropbox, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Dropbox, Inc.
  • Ticker: DBX
  • Exchange: NasdaqGS
  • Founded: 2007
  • Industry: Application Software
  • Sector: Software
  • Implied Market Cap: US$7.415b
  • Shares outstanding: 357.89m
  • Website: https://www.dropbox.com

Number of Employees


Location

  • Dropbox, Inc.
  • 1800 Owens Street
  • San Francisco
  • California
  • 94158
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
DBXWBAG (Wiener Boerse AG)YesClass A Common StockATEURMar 2018
DBXNasdaqGS (Nasdaq Global Select)YesClass A Common StockUSUSDMar 2018
1Q5SWX (SIX Swiss Exchange)YesClass A Common StockCHCHFMar 2018
0SGOLSE (London Stock Exchange)YesClass A Common StockGBUSDMar 2018
1Q5DB (Deutsche Boerse AG)YesClass A Common StockDEEURMar 2018
DBX *BMV (Bolsa Mexicana de Valores)YesClass A Common StockMXMXNMar 2018
1Q5XTRA (XETRA Trading Platform)YesClass A Common StockDEEURMar 2018

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/10/02 00:00
End of Day Share Price2022/09/30 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.