Dropbox, Inc. Beat Analyst Estimates: See What The Consensus Is Forecasting For This Year

Last week saw the newest first-quarter earnings release from Dropbox, Inc. (NASDAQ:DBX), an important milestone in the company's journey to build a stronger business. Revenues were US$631m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.39, an impressive 60% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Dropbox after the latest results.

See our latest analysis for Dropbox

Following last week's earnings report, Dropbox's eleven analysts are forecasting 2024 revenues to be US$2.54b, approximately in line with the last 12 months. Statutory earnings per share are expected to tumble 23% to US$1.18 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.55b and earnings per share (EPS) of US$0.97 in 2024. Although the revenue estimates have not really changed, we can see there's been a sizeable expansion in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.

The consensus price target was unchanged at US$29.00, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Dropbox, with the most bullish analyst valuing it at US$36.00 and the most bearish at US$22.00 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that Dropbox's revenue growth is expected to slow, with the forecast 1.1% annualised growth rate until the end of 2024 being well below the historical 11% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Dropbox.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Dropbox's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Dropbox's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$29.00, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Dropbox going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Dropbox has 3 warning signs (and 1 which is significant) we think you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.