Home / Mobile / Dropbox is crashing despite beating Wall Street expectations, announces COO Dennis Woodside is leaving

Dropbox is crashing despite beating Wall Street expectations, announces COO Dennis Woodside is leaving

Back when Dennis Woodside joined Dropbox as its chief operating officer more than four years ago, the corporate was attempting to justify the $10 billion valuation it had hit in its fast rise as a Web 2.zero darling. Now, Dropbox is a public firm with an almost $14 billion valuation, and it as soon as once more confirmed Wall Street that it’s in a position to beat expectations with a now extra sturdy enterprise enterprise alongside its client roots.

Dropbox’s second quarter outcomes got here in forward of Wall Street’s expectations on each the earnings and income entrance. The firm additionally introduced that Dennis Woodside will probably be leaving the corporate. Woodside joined at a time when Dropbox was beginning to determine its enterprise enterprise, which it was in a position to develop and rework into a robust case for Wall Street that it may lastly be a profitable publicly traded firm. The IPO was certainly profitable, with the corporate’s shares hovering greater than 40 p.c in its debut, so it is sensible that Woodside has basically achieved his job by getting it right into a enterprise prepared for Wall Street.

“I think as a team we accomplished a ton over the last four and a half years,” Woodside mentioned in an interview. “When I joined they were a couple hundred million in revenue and a little under 500 people. [CEO] Drew [Houston] and Arash [Ferdowsi] have built a great business, since then we’ve scaled globally. Close to half our revenue is outside the U.S., we have well over 300,000 teams for our Dropbox business product, which was nascent there. These are accomplishments of the team, and I’m pretty proud.”

The inventory initially exploded in prolonged buying and selling by rising greater than 7 p.c, although even previous to the market shut and the corporate reporting its earnings, the inventory had risen as a lot as 10 p.c. But following that spike, Dropbox shares are actually down round 5 p.c. Dropbox is one in every of plenty of SaaS firms which have gone public in current months, together with DocuSign, which have seen appreciable success. While Dropbox has managed to make its case with a robust enterprise enterprise, the corporate was born with client roots and has tried to hold over that simplicity with the enterprise merchandise it rolls out, like its collaboration instrument Dropbox Paper.

Here’s a fast rundown of the numbers:

  • Q2 Revenue: Up 27 p.c year-over-year to $339.2 million, in comparison with estimates of $331 million in income.
  • Q2 GAAP Gross Margin: 73.6 p.c, as in comparison with 65.four p.c in the identical interval final 12 months.
  • Q2 adjusted earnings: 11 cents per share in contrast, in comparison with estimates of seven cents per share.
  • Paid customers: 11.9 million paying customers, up from 9.9 million in the identical quarter final 12 months.
  • ARPU: $116.66, in comparison with $111.19 similar quarter final 12 months.

So, not solely is Dropbox in a position to present that it may possibly proceed to develop that income, the precise worth of its customers can also be going up. That’s essential, as a result of Dropbox has to point out that it may possibly proceed to amass higher-value prospects — which means it’s progressively transferring up the Fortune 100 chain and getting bigger and extra established firms on board that may supply it greater and greater contracts. It additionally provides it the room to make bigger strategic strikes, like migrating onto its own architecture late final 12 months, which, in the long term may end up to drastically enhance the margins on its enterprise.

“We did talk earlier in the quarter about our investment over the last couple years in SMR technology, an innovative storage technology that allows us to optimize cost and performance,” Woodside mentioned. “We continue to innovate ways that allow us to drive better performance, and that drives better economics.”

The firm remains to be trying to make vital strikes within the type of new hires, together with just lately asserting that it has a brand new VP of product and VP of product advertising and marketing, Adam Nash and Naman Khan, respectively. Dropbox’s new crew beneath CEO Drew Houston are tasked with persevering with the corporate’s path to cracking into bigger enterprises, which may give it a way more predictable and sturdy enterprise alongside the typical customers that pay to host their information on-line and entry them from just about wherever.

In addition, there are a pair government adjustments as Woodside transitions out. Yamini Rangan, presently VP of Business Strategy & Operations, will turn out to be Chief Customer Officer reporting to Houston, and comms VP Lin-Hua Wu may even report back to Houston.

Dropbox had its first quarterly earnings check-in and slid previous the expectations that Wall Street had, although its GAAP gross margin slipped a little bit and may have offered a slight negative signal for the company. But since then, Dropbox’s inventory hasn’t had any main missteps, giving it extra credibility on the general public markets — and extra assets to draw and retain expertise with compensation packages linked to that inventory.

“Our retention has been quite strong,” Woodside mentioned. “We see strong retention characteristics across the customer set we have, whether it’s large or small. Obviously larger companies have more opportunity to expand over time, so our expansion metrics are quite strong in customers of over several hundred employees. But even among small businesses, Dropbox is the kind of product that has gravity. Once you start using it and start sharing it, it becomes a place where your business is small or large is managing all its content, it tends to be a sticky experience.”

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