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Why Dropbox Falls Drop 8.4% Friday – Motley Fool



What happened

The shares of cloud storage and the online co-operative company Dropbox (NASDAQ: DBX) fell by 10% on the same day. But the shares completed the trading day by 8.4%

The stock drop was caused by the upgrade of the fourth quarter of the company. Although earnings and adjusted earnings per share over this period surpassed the consensus forecasts of analysts for two indicators, the company's operating margin was lower than expected

  Three laptops are connected to the cloud

Source of image: Getty Images.

So

Dropbox reported revenues in the fourth quarter of $ 375.9 million, which is 23% more than a year ago, continuing the trend of slowing growth. Meanwhile, non-GAAP earnings per share rose from $ 0.03 a year to the quarter to $ 0.10. On average, analysts expect earnings and non-GAAP earnings per share of $ 370 million and $ 0.08, respectively.

The free cash flow for the quarter is $ 88.3 million, up from $ 57.8 million in the year to the quarter.

healthy growth in the top line and the creation of a free cash flow reflect our strong business model, "said Dropbox CEO Drew Huston in upgrading the fourth quarter of the company.

But the company was disappointed when it came to forecasting its operating margin. Dropbox said it was expecting its non-GAAP operating margin for its first quarter to be between 7% and 8%. Analysts, on average, expected an operating margin in the first quarter, which did not equal 12.5%. Dropbox's chief financial officer, Ajay Vashee, said in the fourth quarter of the company's profits that the lower operating margin "includes integrative and synergistic investments associated with HelloSign, the e-signature platform and the workflow that the company recently acquired.

The first quarter of the company, Dropbox, expects revenue to be $ 379 to $ 389 million, up from $ 316 million in the first quarter of 2018. Throughout the year, the company expects revenues in the range of $ 1.627 billion and $ 1.642 billion, compared with revenues in 2018, $ 1.392 billion.

Moving forward, management excite its recent acquisition of HelloSign. "And in 2019, we are already starting with our acquisition of HelloSign a few weeks ago," said Dropbox CEO Drew X & # 39; Yuston in earning profits from HelloSign built a prosperous business focused on an electronic signature and document

Daniel Sparks does not have Motley Fool does not have any position in any of the abovementioned stocks. Motley Fool has a policy of disclosure.


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