[August 09, 2018] |
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Dropbox Announces Fiscal 2018 Second Quarter Results
Dropbox, Inc. (NASDAQ: DBX), a leading global collaboration platform,
today announced financial results for its second fiscal quarter ended
June 30, 2018.
"We delivered another solid quarter of revenue growth in Q2, reflecting
the strength of our unique business model," said Dropbox Co-Founder and
Chief Executive Officer Drew Houston. "We added over a dozen new product
features to our user and admin experiences, and strengthened our
infrastructure, all while driving a 30% free cash flow margin. With our
massive scale and continued product innovation, we're well on our way to
advancing our mission of designing a more enlightened way of working."
Second Quarter Fiscal 2018 Results
-
Total revenue was $339.2 million, an increase of 27% from the same
period last year.
-
Paying users totaled 11.9 million, as compared to 9.9 million for the
same period last year. Average revenue per paying user was $116.66, as
compared to $111.19 for the same period last year.
-
GAAP gross margin was 73.6%, as compared to 65.4% in the same period
last year. Non-GAAP gross margin was 74.5%, as compared to 66.7% in
the same period last year.
-
GAAP operating margin was (2.1%), as compared to (10.0%) in the same
period last year. Non-GAAP operating margin was 14.1%, as compared to
8.0% in the same period last year.
-
GAAP net loss was ($4.1) million, as compared to ($26.8) million in
the same period last year. Non-GAAP net income was $48.0 million, as
compared to $20.0 million in the same period last year.
-
Net cash provided by operating activities was $111.9 million, as
compared to $86.1 million in the same period last year. Free cash flow
was $102.2 million, as compared to $82.4 million in the same period
last year.
-
GAAP basic and diluted net loss per share was ($0.01), as compared to
($0.14) in the same period last year. Non-GAAP diluted net income per
share was $0.11, as compared to $0.06 in the same period last year.(1)
-
Cash, cash equivalents and short-term investments were $981.8 million
at the end of the second quarter of 2018.
(1) Non-GAAP diluted net income per share is calculated based
upon 423.1 million and 346.9 million diluted weighted-average shares of
common stock for the three months ended June 30, 2018 and 2017,
respectively.
Financial Outlook
Dropbox will provide forward-looking guidance in connection with this
quarterly earnings announcement on our conference call, webcast, and on
our investor relations website at investors.dropbox.com.
COO Transition
Dropbox also announced that Dennis Woodside is stepping down as Chief
Operating Officer. He'll remain at the company until early September and
serve as an advisor through the end of the year.
During his time at Dropbox, Dennis helped build a strong leadership
bench, and Dropbox is proud to announce the promotion of two of these
senior leaders. They'll join the executive team, which will be
restructured to take on Dennis' responsibilities and drive even greater
focus on our customers and partners. As a result, the company does not
plan to hire another COO.
-
Yamini Rangan, currently VP of Business Strategy & Operations, will
become Chief Customer Officer reporting to CEO Drew Houston. In this
new role, she'll be responsible for customer-focused business
functions, including Global Sales, Marketing, Customer Experience,
Business Development, and Business Strategy & Operations. Yamini
joined Dropbox in 2016 and has 20 years of leadership experience
across sales, marketing, and operations. Most recently, she led Global
Sales Strategy and Operations at Workday, and prior to that, she held
senior positions at Appirio and SAP.
-
Lin-Hua Wu, VP of Communications, will also report to CEO Drew
Houston. Lin joined Dropbox in 2016 and oversees external and internal
communications, and analyst relations. Her role will help ensure the
company has the right market context informing its decisions, and that
its communications are fully aligned with business strategy. Lin
brings more than two decades of experience to Dropbox, coming most
recently from Square, where she led Corporate Communications, and
Brunswick Group, where she was a partner.
"I've had an amazing four years at Dropbox, and am proud of what we've
accomplished together. It's been an honor to work with such
exceptionally talented people and help grow and scale our business,"
said Dennis. "I couldn't be happier for Yamini and Lin on their
promotions, and am confident that the new executive team will take the
company to even greater heights."
"We're grateful for everything Dennis has done for us," said Drew. "He's
helped transform Dropbox into a publicly-traded company with over $1
billion in annual revenue and 12 offices around the world. Dennis will
always be part of the Dropbox family, and we wish him all the best."
Conference Call Information
Dropbox plans to host a conference call today to review its second
quarter financial results and to discuss its financial outlook. This
call is scheduled to begin at 2:00 p.m. PT / 5:00 p.m. ET and can be
accessed by dialing (877) 300-7844 from the United States or (786)
815-8440 internationally with reference to the company name and
conference title, and a live webcast and replay of the conference call
can be accessed from the Dropbox investor relations website at investors.dropbox.com.
Following the completion of the call, a telephonic replay will be
available through 11:59 PM Eastern Time on August 16, 2018 at (855)
859-2056 from the United States or (404) 537-3406 internationally with
recording access code 5483595.
Other Upcoming Events
-
Dropbox to Present at KeyBanc Capital Markets 20th Annual
Technology Leadership Forum: Ajay Vashee, Chief Financial Officer,
will be presenting at the KeyBanc Capital Markets 20th Annual
Technology Leadership Forum in Vail, CO, on Monday, August 13, 2018 at
1:30 p.m. MT / 3:30 p.m. ET. At that time, a live webcast will be
accessible from the Dropbox investor relations website at http://investors.dropbox.com.
Following the event, a replay will be made available at the same
location.
-
Dropbox Lock-up Expiration: In connection with our initial
public offering of Class A common stock (the "IPO"), all of our
executive officers, directors and holders of our capital stock and
securities convertible into or exchangeable for our capital stock as
of the IPO entered into market standoff agreements with the Company or
entered into lock-up agreements (the "lock-up") with the underwriters
that restrict their ability to sell or transfer their shares. The
lock-up period is scheduled to end on September 18, 2018, which falls
within our quarterly blackout period that commences at the close of
trading on September 7, 2018. Therefore, in accordance with the
lock-up agreements with the underwriters, the restricted period will
end at the close of market on August 23, 2018, which is ten trading
days prior to the commencement of our quarterly blackout period. We
will also release our market standoff agreements when the restricted
period expires.
About Dropbox
Dropbox is a leading global collaboration platform that's transforming
the way people work together, from the smallest business to the largest
enterprise. With more than 500 million registered users across more than
180 countries, our products are designed to help unleash the world's
creative energy and establish a more enlightened way of working.
Headquartered in San Francisco, CA, Dropbox has 12 offices around the
world. For more information on our mission and products, visit dropbox.com.
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to the most directly
comparable financial results as determined in accordance with GAAP are
included at the end of this press release following the accompanying
financial data. For a description of these non-GAAP financial measures,
including the reasons management uses each measure, please see the
section of the tables titled "About Non-GAAP Financial Measures."
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995
including, among other things, statements regarding Dropbox's future
operational performance, the demand for our platform, the benefits from
new product experiences, and expectations regarding stock-based
compensation expense. Words such as "believe," "may," "will,"
"estimate," "continue," "anticipate," "intend," "expect," "plans," and
similar expressions are intended to identify forward-looking statements.
Dropbox has based these forward-looking statements largely on its
current expectations and projections about future events and financial
trends that the Company believes may affect its business, financial
condition, and results of operations. These forward-looking statements
speak only as of the date of this press release and are subject to
risks, uncertainties, and assumptions including, but not limited to: (i)
our ability to retain and upgrade paying users; (ii) our ability to
attract new users or convert registered users to paying users; (iii) our
revenue growth rate; (iv) our history of net losses; (v) our liability
for any unauthorized access to our data or our users' content, including
through privacy and data security breaches; (vi) significant disruption
of service on our platform or loss of content; (vii) any decline in
demand for our platform or for content collaboration solutions in
general; (viii) changes in the interoperability of our platform across
devices, operating systems, and third-party applications that we do not
control; (ix) competition in our markets; (x) our ability to respond to
rapid technological changes, extend our platform, or develop new
features; (xi) our ability to manage our growth or plan for future
growth; and (xii) the dual class structure of our common stock and its
effect of concentrating voting control with certain stockholders who
held our capital stock prior to the completion of our initial public
offering. Further information on risks that could affect Dropbox's
results is included in our filings with the Securities and Exchange
Commission (SEC), including our Form 10-Q for the quarter ended March
31, 2018. Additional information will be made available in our quarterly
report on Form 10-Q and other future reports that we may file with the
SEC from time to time, which could cause actual results to vary from
expectations. If the risks materialize or assumptions prove incorrect,
actual results could differ materially from the results implied by these
forward-looking statements. Dropbox assumes no obligation to, and does
not currently intend to, update any such forward-looking statements
after the date of this release, except as required by applicable law.
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Dropbox, Inc.
|
Condensed Consolidated Statements of Operations
|
(In millions, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
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June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Revenue
|
|
$
|
339.2
|
|
|
$
|
266.7
|
|
|
$
|
655.5
|
|
|
$
|
514.6
|
|
Cost of revenue(1)
|
|
|
89.5
|
|
|
|
92.2
|
|
|
|
210.1
|
|
|
|
185.7
|
|
Gross profit
|
|
|
249.7
|
|
|
|
174.5
|
|
|
|
445.4
|
|
|
|
328.9
|
|
Operating expenses(1):
|
|
|
|
|
|
|
|
|
Research and development
|
|
|
119.7
|
|
|
|
89.8
|
|
|
|
498.2
|
|
|
|
179.1
|
|
Sales and marketing
|
|
|
87.4
|
|
|
|
69.2
|
|
|
|
244.4
|
|
|
|
136.4
|
|
General and administrative
|
|
|
49.8
|
|
|
|
42.2
|
|
|
|
175.9
|
|
|
|
73.5
|
|
Total operating expenses
|
|
|
256.9
|
|
|
|
201.2
|
|
|
|
918.5
|
|
|
|
389.0
|
|
Loss from operations
|
|
|
(7.2
|
)
|
|
|
(26.7
|
)
|
|
|
(473.1
|
)
|
|
|
(60.1
|
)
|
Interest income (expense), net
|
|
|
2.0
|
|
|
|
(3.0
|
)
|
|
|
0.8
|
|
|
|
(7.2
|
)
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Other income, net
|
|
|
2.2
|
|
|
|
3.3
|
|
|
|
5.6
|
|
|
|
8.1
|
|
Loss before income taxes
|
|
|
(3.0
|
)
|
|
|
(26.4
|
)
|
|
|
(466.7
|
)
|
|
|
(59.2
|
)
|
Provision for income taxes
|
|
|
(1.1
|
)
|
|
|
(0.4
|
)
|
|
|
(2.9
|
)
|
|
|
(0.7
|
)
|
Net loss
|
|
$
|
(4.1
|
)
|
|
$
|
(26.8
|
)
|
|
$
|
(469.6
|
)
|
|
$
|
(59.9
|
)
|
Net loss per share attributable to common stockholders, basic and
diluted
|
|
$
|
(0.01
|
)
|
|
$
|
(0.14
|
)
|
|
$
|
(1.51
|
)
|
|
$
|
(0.31
|
)
|
Weighted-average shares used in computing net loss per share
attributable to common stockholders, basic and diluted
|
|
|
401.3
|
|
|
|
195.4
|
|
|
|
310.5
|
|
|
|
194.5
|
|
|
|
|
|
|
|
|
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(1) Includes stock-based compensation expense as follows:
|
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|
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|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Cost of revenue
|
|
$
|
2.9
|
|
|
$
|
3.3
|
|
|
$
|
40.7
|
|
|
$
|
6.4
|
|
Research and development
|
|
|
27.9
|
|
|
|
21.7
|
|
|
|
310.8
|
|
|
|
43.5
|
|
Sales and marketing
|
|
|
7.9
|
|
|
|
7.7
|
|
|
|
80.3
|
|
|
|
15.4
|
|
General and administrative
|
|
|
16.4
|
|
|
|
6.0
|
|
|
|
109.8
|
|
|
|
12.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dropbox, Inc.
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Condensed Consolidated Balance Sheets
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(In millions)
|
(Unaudited)
|
|
|
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As of
|
|
|
June 30, 2018
|
|
December 31, 2017
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
504.1
|
|
|
$
|
430.0
|
|
Short-term investments
|
|
|
477.7
|
|
|
|
-
|
|
Trade and other receivables, net
|
|
|
31.2
|
|
|
|
29.3
|
|
Prepaid expenses and other current assets
|
|
|
86.8
|
|
|
|
58.8
|
|
Total current assets
|
|
|
1,099.8
|
|
|
|
518.1
|
|
Property and equipment, net
|
|
|
330.8
|
|
|
|
341.9
|
|
Intangible assets, net
|
|
|
16.3
|
|
|
|
17.0
|
|
Goodwill
|
|
|
97.8
|
|
|
|
98.9
|
|
Other assets
|
|
|
57.7
|
|
|
|
44.0
|
|
Total assets
|
|
$
|
1,602.4
|
|
|
$
|
1,019.9
|
|
Liabilities and stockholders' equity
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
24.0
|
|
|
$
|
31.9
|
|
Accrued and other current liabilities
|
|
|
172.3
|
|
|
|
129.8
|
|
Accrued compensation and benefits
|
|
|
45.1
|
|
|
|
56.1
|
|
Capital lease obligation
|
|
|
87.1
|
|
|
|
102.7
|
|
Deferred revenue
|
|
|
464.8
|
|
|
|
417.9
|
|
Total current liabilities
|
|
|
793.3
|
|
|
|
738.4
|
|
Capital lease obligation, non-current
|
|
|
73.1
|
|
|
|
71.6
|
|
Deferred rent, non-current
|
|
|
73.6
|
|
|
|
69.8
|
|
Other non-current liabilities
|
|
|
31.5
|
|
|
|
37.2
|
|
Total liabilities
|
|
|
971.5
|
|
|
|
917.0
|
|
Stockholders' equity:
|
|
|
|
|
Convertible preferred stock
|
|
|
-
|
|
|
|
615.3
|
|
Preferred stock
|
|
|
-
|
|
|
|
-
|
|
Common stock
|
|
|
-
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
2,248.4
|
|
|
|
533.1
|
|
Accumulated deficit
|
|
|
(1,619.4
|
)
|
|
|
(1,049.7
|
)
|
Accumulated other comprehensive income
|
|
|
1.9
|
|
|
|
4.2
|
|
Total stockholders' equity
|
|
|
630.9
|
|
|
|
102.9
|
|
Total liabilities and stockholders' equity
|
|
$
|
1,602.4
|
|
|
$
|
1,019.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dropbox, Inc.
|
Condensed Consolidated Statements of Cash Flows
|
(In millions)
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Cash flow from operating activities
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(4.1
|
)
|
|
$
|
(26.8
|
)
|
|
$
|
(469.6
|
)
|
|
$
|
(59.9
|
)
|
Adjustments to reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
40.0
|
|
|
|
46.4
|
|
|
|
75.9
|
|
|
|
94.4
|
|
Stock-based compensation
|
|
|
55.1
|
|
|
|
38.7
|
|
|
|
541.6
|
|
|
|
77.5
|
|
Amortization of deferred commissions
|
|
|
2.9
|
|
|
|
1.4
|
|
|
|
5.3
|
|
|
|
2.6
|
|
Donation of common stock to charitable foundation
|
|
|
-
|
|
|
|
9.4
|
|
|
|
-
|
|
|
|
9.4
|
|
Other
|
|
|
(0.5
|
)
|
|
|
(0.4
|
)
|
|
|
(1.1
|
)
|
|
|
(0.9
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Trade and other receivables, net
|
|
|
(5.5
|
)
|
|
|
(8.7
|
)
|
|
|
(1.9
|
)
|
|
|
(9.1
|
)
|
Prepaid expenses and other current assets
|
|
|
(32.4
|
)
|
|
|
(4.7
|
)
|
|
|
(33.9
|
)
|
|
|
2.4
|
|
Other assets
|
|
|
(11.8
|
)
|
|
|
(0.3
|
)
|
|
|
(17.5
|
)
|
|
|
(2.1
|
)
|
Accounts payable
|
|
|
(5.7
|
)
|
|
|
1.8
|
|
|
|
(8.5
|
)
|
|
|
2.6
|
|
Accrued and other current liabilities
|
|
|
35.7
|
|
|
|
6.1
|
|
|
|
44.5
|
|
|
|
11.8
|
|
Accrued compensation and benefits
|
|
|
15.3
|
|
|
|
13.5
|
|
|
|
(10.9
|
)
|
|
|
(6.6
|
)
|
Deferred revenue
|
|
|
19.7
|
|
|
|
13.3
|
|
|
|
46.4
|
|
|
|
32.2
|
|
Non-current liabilities
|
|
|
3.2
|
|
|
|
(3.6
|
)
|
|
|
3.4
|
|
|
|
(6.6
|
)
|
Net cash provided by operating activities
|
|
|
111.9
|
|
|
|
86.1
|
|
|
|
173.7
|
|
|
|
147.7
|
|
Cash flow from investing activities
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(9.7
|
)
|
|
|
(3.7
|
)
|
|
|
(19.6
|
)
|
|
|
(8.8
|
)
|
Purchase of intangible assets
|
|
|
-
|
|
|
|
(0.5
|
)
|
|
|
(2.5
|
)
|
|
|
(0.8
|
)
|
Cash received from equipment rebates
|
|
|
0.8
|
|
|
|
0.6
|
|
|
|
0.9
|
|
|
|
1.9
|
|
Purchases of short-term investments
|
|
|
(315.1
|
)
|
|
|
-
|
|
|
|
(495.9
|
)
|
|
|
-
|
|
Proceeds from maturities of short-term investments
|
|
|
16.4
|
|
|
|
-
|
|
|
|
16.4
|
|
|
|
-
|
|
Proceeds from sales of short-term investments
|
|
|
3.1
|
|
|
|
-
|
|
|
|
3.1
|
|
|
|
-
|
|
Net cash used in investing activities
|
|
|
(304.5
|
)
|
|
|
(3.6
|
)
|
|
|
(497.6
|
)
|
|
|
(7.7
|
)
|
Cash flow from financing activities
|
|
|
|
|
|
|
|
|
Proceeds from initial public offering and private placement, net of
underwriters' discounts and commissions
|
|
|
108.4
|
|
|
|
-
|
|
|
|
746.6
|
|
|
|
-
|
|
Payments of deferred offering costs
|
|
|
(2.5
|
)
|
|
|
-
|
|
|
|
(3.4
|
)
|
|
|
-
|
|
Shares repurchased for tax withholdings on release of restricted
stock
|
|
|
(41.2
|
)
|
|
|
-
|
|
|
|
(282.4
|
)
|
|
|
(24.0
|
)
|
Principal payments against capital lease obligations
|
|
|
(28.5
|
)
|
|
|
(34.7
|
)
|
|
|
(58.3
|
)
|
|
|
(69.3
|
)
|
Other
|
|
|
(1.8
|
)
|
|
|
(3.9
|
)
|
|
|
(3.1
|
)
|
|
|
(5.1
|
)
|
Net cash provided by (used in) financing activities
|
|
|
34.4
|
|
|
|
(38.6
|
)
|
|
|
399.4
|
|
|
|
(98.4
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(3.0
|
)
|
|
|
0.6
|
|
|
|
(1.4
|
)
|
|
|
1.4
|
|
Change in cash and cash equivalents
|
|
|
(161.2
|
)
|
|
|
44.5
|
|
|
|
74.1
|
|
|
|
43.0
|
|
Cash and cash equivalents-beginning of period
|
|
|
665.3
|
|
|
|
351.2
|
|
|
|
430.0
|
|
|
|
352.7
|
|
Cash and cash equivalents-end of period
|
|
$
|
504.1
|
|
|
$
|
395.7
|
|
|
$
|
504.1
|
|
|
$
|
395.7
|
|
|
|
|
|
|
|
|
|
|
Supplemental cash flow data:
|
|
|
|
|
|
|
|
|
Property and equipment acquired under capital leases
|
|
$
|
18.7
|
|
|
$
|
0.9
|
|
|
$
|
44.2
|
|
|
$
|
15.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dropbox, Inc.
|
Three Months Ended June 30, 2018
|
Reconciliation of GAAP to Non-GAAP results
|
(In millions, except for percentages, which may not foot due to
rounding)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
Stock-based compensation
|
|
Donation of common stock to the Dropbox Foundation
|
|
Non-GAAP
|
Cost of revenue
|
|
$
|
89.5
|
|
|
$
|
(2.9
|
)
|
|
|
$
|
-
|
|
|
|
$
|
86.6
|
|
Cost of revenue margin
|
|
|
26.4
|
%
|
|
|
(0.9
|
)%
|
|
|
|
-
|
%
|
|
|
|
25.5
|
%
|
Gross profit
|
|
|
249.7
|
|
|
|
2.9
|
|
|
|
|
-
|
|
|
|
|
252.6
|
|
Gross margin
|
|
|
73.6
|
%
|
|
|
0.9
|
%
|
|
|
|
-
|
%
|
|
|
|
74.5
|
%
|
Research and development
|
|
|
119.7
|
|
|
|
(27.9
|
)
|
|
|
|
-
|
|
|
|
|
91.8
|
|
Research and development margin
|
|
|
35.3
|
%
|
|
|
(8.2
|
)%
|
|
|
|
-
|
%
|
|
|
|
27.1
|
%
|
Sales and marketing
|
|
|
87.4
|
|
|
|
(7.9
|
)
|
|
|
|
-
|
|
|
|
|
79.5
|
|
Sales and marketing margin
|
|
|
25.8
|
%
|
|
|
(2.3
|
)%
|
|
|
|
-
|
%
|
|
|
|
23.4
|
%
|
General and administrative
|
|
|
49.8
|
|
|
|
(16.4
|
)
|
|
|
|
-
|
|
|
|
|
33.4
|
|
General and administrative margin
|
|
|
14.7
|
%
|
|
|
(4.8
|
)%
|
|
|
|
-
|
%
|
|
|
|
9.8
|
%
|
Income (loss) from operations
|
|
$
|
(7.2
|
)
|
|
$
|
55.1
|
|
|
|
$
|
-
|
|
|
|
$
|
47.9
|
|
Operating margin
|
|
|
(2.1
|
)%
|
|
|
16.2
|
%
|
|
|
|
-
|
%
|
|
|
|
14.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dropbox, Inc.
|
Three Months Ended June 30, 2017
|
Reconciliation of GAAP to Non-GAAP results
|
(In millions, except for percentages, which may not foot due to
rounding)
|
(Unaudited)
|
|
|
|
GAAP
|
|
Stock-based compensation
|
|
Donation of common stock to the Dropbox Foundation
|
|
Non-GAAP
|
Cost of revenue
|
|
$
|
92.2
|
|
|
$
|
(3.3
|
)
|
|
|
$
|
-
|
|
|
|
|
$
|
88.9
|
|
Cost of revenue margin
|
|
|
34.6
|
%
|
|
|
(1.3
|
)%
|
|
|
|
-
|
%
|
|
|
|
|
33.3
|
%
|
Gross profit
|
|
|
174.5
|
|
|
|
3.3
|
|
|
|
|
-
|
|
|
|
|
|
177.8
|
|
Gross margin
|
|
|
65.4
|
%
|
|
|
1.3
|
%
|
|
|
|
-
|
%
|
|
|
|
|
66.7
|
%
|
Research and development
|
|
|
89.8
|
|
|
|
(21.7
|
)
|
|
|
|
-
|
|
|
|
|
|
68.1
|
|
Research and development margin
|
|
|
33.7
|
%
|
|
|
(8.2
|
)%
|
|
|
|
-
|
%
|
|
|
|
|
25.5
|
%
|
Sales and marketing
|
|
|
69.2
|
|
|
|
(7.7
|
)
|
|
|
|
-
|
|
|
|
|
|
61.5
|
|
Sales and marketing margin
|
|
|
25.9
|
%
|
|
|
(2.8
|
)%
|
|
|
|
-
|
%
|
|
|
|
|
23.1
|
%
|
General and administrative
|
|
|
42.2
|
|
|
|
(6.0
|
)
|
|
|
|
(9.4
|
)
|
|
|
|
|
26.8
|
|
General and administrative margin
|
|
|
15.8
|
%
|
|
|
(2.2
|
)%
|
|
|
|
(3.5
|
)%
|
|
|
|
|
10.0
|
%
|
Income (loss) from operations
|
|
$
|
(26.7
|
)
|
|
$
|
38.7
|
|
|
|
$
|
9.4
|
|
|
|
|
$
|
21.4
|
|
Operating margin
|
|
|
(10.0
|
)%
|
|
|
14.5
|
%
|
|
|
|
3.5
|
%
|
|
|
|
|
8.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dropbox, Inc.
|
Six Months Ended June 30, 2018
|
Reconciliation of GAAP to Non-GAAP results
|
(In millions, except for percentages, which may not foot due to
rounding)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
Stock-based compensation
|
|
Employer payroll taxes related to the release of two-tier
RSUs
|
|
Donation of common stock to the Dropbox Foundation
|
|
Non-GAAP
|
Cost of revenue
|
|
$
|
210.1
|
|
|
$
|
(40.7
|
)
|
|
|
$
|
(1.1
|
)
|
|
|
$
|
-
|
|
|
|
$
|
168.3
|
|
Cost of revenue margin
|
|
|
32.1
|
%
|
|
|
(6.2
|
)%
|
|
|
|
(0.2
|
)%
|
|
|
|
-
|
%
|
|
|
|
25.7
|
%
|
Gross profit
|
|
|
445.4
|
|
|
|
40.7
|
|
|
|
|
1.1
|
|
|
|
|
-
|
|
|
|
|
487.2
|
|
Gross margin
|
|
|
67.9
|
%
|
|
|
6.2
|
%
|
|
|
|
0.2
|
%
|
|
|
|
-
|
%
|
|
|
|
74.3
|
%
|
Research and development
|
|
|
498.2
|
|
|
|
(310.8
|
)
|
|
|
|
(8.3
|
)
|
|
|
|
-
|
|
|
|
|
179.1
|
|
Research and development margin
|
|
|
76.0
|
%
|
|
|
(47.4
|
)%
|
|
|
|
(1.3
|
)%
|
|
|
|
-
|
%
|
|
|
|
27.3
|
%
|
Sales and marketing
|
|
|
244.4
|
|
|
|
(80.3
|
)
|
|
|
|
(2.2
|
)
|
|
|
|
-
|
|
|
|
|
161.9
|
|
Sales and marketing margin
|
|
|
37.3
|
%
|
|
|
(12.3
|
)%
|
|
|
|
(0.3
|
)%
|
|
|
|
-
|
%
|
|
|
|
24.7
|
%
|
General and administrative
|
|
|
175.9
|
|
|
|
(109.8
|
)
|
|
|
|
(2.3
|
)
|
|
|
|
-
|
|
|
|
|
63.8
|
|
General and administrative margin
|
|
|
26.8
|
%
|
|
|
(16.8
|
)%
|
|
|
|
(0.4
|
)%
|
|
|
|
-
|
%
|
|
|
|
9.7
|
%
|
Income (loss) from operations
|
|
$
|
(473.1
|
)
|
|
$
|
541.6
|
|
|
|
$
|
13.9
|
|
|
|
$
|
-
|
|
|
|
$
|
82.4
|
|
Operating margin
|
|
|
(72.2
|
)%
|
|
|
82.6
|
%
|
|
|
|
2.1
|
%
|
|
|
|
-
|
%
|
|
|
|
12.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dropbox, Inc.
|
Six Months Ended June 30, 2017
|
Reconciliation of GAAP to Non-GAAP results
|
(In millions, except for percentages, which may not foot due to
rounding)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
|
|
Stock-based compensation
|
|
Employer payroll taxes related to the release of two-tier
RSUs
|
|
Donation of common stock to the Dropbox Foundation
|
|
Non-GAAP
|
Cost of revenue
|
|
$
|
185.7
|
|
|
$
|
(6.4
|
)
|
|
|
$
|
-
|
|
|
|
$
|
-
|
|
|
|
$
|
179.3
|
|
Cost of revenue margin
|
|
|
36.1
|
%
|
|
|
(1.3
|
)%
|
|
|
|
-
|
%
|
|
|
|
-
|
%
|
|
|
|
34.8
|
%
|
Gross profit
|
|
|
328.9
|
|
|
|
6.4
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
335.3
|
|
Gross margin
|
|
|
63.9
|
%
|
|
|
1.3
|
%
|
|
|
|
-
|
%
|
|
|
|
-
|
%
|
|
|
|
65.2
|
%
|
Research and development
|
|
|
179.1
|
|
|
|
(43.5
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
135.6
|
|
Research and development margin
|
|
|
34.8
|
%
|
|
|
(8.5
|
)%
|
|
|
|
-
|
%
|
|
|
|
-
|
%
|
|
|
|
26.4
|
%
|
Sales and marketing
|
|
|
136.4
|
|
|
|
(15.4
|
)
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
121.0
|
|
Sales and marketing margin
|
|
|
26.5
|
%
|
|
|
(3.0
|
)%
|
|
|
|
-
|
%
|
|
|
|
-
|
%
|
|
|
|
23.5
|
%
|
General and administrative
|
|
|
73.5
|
|
|
|
(12.2
|
)
|
|
|
|
-
|
|
|
|
|
(9.4
|
)
|
|
|
|
51.9
|
|
General and administrative margin
|
|
|
14.3
|
%
|
|
|
(2.4
|
)%
|
|
|
|
-
|
%
|
|
|
|
(1.8
|
)%
|
|
|
|
10.1
|
%
|
Income (loss) from operations
|
|
$
|
(60.1
|
)
|
|
$
|
77.5
|
|
|
|
$
|
-
|
|
|
|
|
9.4
|
|
|
|
$
|
26.8
|
|
Operating margin
|
|
|
(11.7
|
)%
|
|
|
15.1
|
%
|
|
|
|
-
|
%
|
|
|
|
1.8
|
%
|
|
|
|
5.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dropbox, Inc.
|
Three and six months ended June 30, 2018 and 2017
|
Reconciliation of GAAP net loss to Non-GAAP net income and
Non-GAAP diluted net income per share
|
(In millions, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
Six months ended June 30,
|
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
|
2017
|
GAAP net loss
|
|
$
|
(4.1
|
)
|
|
|
|
$
|
(26.8
|
)
|
|
|
|
$
|
(469.6
|
)
|
|
|
|
$
|
(59.9
|
)
|
|
Stock-based compensation
|
|
|
55.1
|
|
|
|
|
|
38.7
|
|
|
|
|
|
541.6
|
|
|
|
|
|
77.5
|
|
|
Employer payroll taxes related to the release of two-tier RSUs
|
|
|
-
|
|
|
|
|
|
-
|
|
|
|
|
|
13.9
|
|
|
|
|
|
-
|
|
|
Donation of common stock to the Dropbox Foundation
|
|
|
-
|
|
|
|
|
|
9.4
|
|
|
|
|
|
-
|
|
|
|
|
|
9.4
|
|
|
Income tax effects of non-GAAP adjustments
|
|
|
(3.0
|
)
|
|
|
|
|
(1.3
|
)
|
|
|
|
|
(7.0
|
)
|
|
|
|
|
(1.8
|
)
|
|
Non-GAAP net income
|
|
$
|
48.0
|
|
|
|
|
$
|
20.0
|
|
|
|
|
$
|
78.9
|
|
|
|
|
$
|
25.2
|
|
|
Non-GAAP diluted net income per share
|
|
$
|
0.11
|
|
|
|
|
$
|
0.06
|
|
|
|
|
$
|
0.20
|
|
|
|
|
$
|
0.07
|
|
|
Weighted-average shares used to compute Non-GAAP diluted net income
per share
|
|
|
423.1
|
|
|
|
|
|
346.9
|
|
|
|
|
|
397.4
|
|
|
|
|
|
344.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dropbox, Inc.
|
Three and six months ended June 30, 2018 and 2017
|
Reconciliation of free cash flow and supplemental cash flow
disclosure
|
(In millions, except for percentages)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June 30,
|
|
|
|
Six months ended June 30,
|
|
|
|
2018
|
|
|
|
2017
|
|
|
|
2018
|
|
|
|
2017
|
|
Free cash flow reconciliation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
111.9
|
|
|
|
|
$
|
86.1
|
|
|
|
|
$
|
173.7
|
|
|
|
|
$
|
147.7
|
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
(9.7
|
)
|
|
|
|
|
(3.7
|
)
|
|
|
|
|
(19.6
|
)
|
|
|
|
|
(8.8
|
)
|
|
Free cash flow
|
|
$
|
102.2
|
|
|
|
|
$
|
82.4
|
|
|
|
|
$
|
154.1
|
|
|
|
|
$
|
138.9
|
|
|
Free cash flow margin
|
|
|
30.1
|
%
|
|
|
|
|
30.9
|
%
|
|
|
|
|
23.5
|
%
|
|
|
|
|
27.0
|
%
|
|
Supplemental disclosures:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures related to our new corporate headquarters, net
of tenant improvement allowances(1)
|
|
$
|
1.6
|
|
|
|
|
$
|
-
|
|
|
|
|
$
|
2.2
|
|
|
|
|
$
|
-
|
|
|
(1) Capital expenditures include cash outflows related to the
build-out of our new corporate headquarters in San Francisco, CA. Net
cash provided by operating activities include tenant improvement
allowances related to our new corporate headquarters, and represents
cash received from our landlord to offset this build-out. These amounts
are presented net in the table above. There was no cash received from
our landlord related to our new corporate headquarters in the periods
presented.
About Non-GAAP Financial Measures
To provide investors and others with additional information regarding
Dropbox's results, we have disclosed the following non-GAAP financial
measures: non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP
operating expenses (including research and development, sales and
marketing and general and administrative), non-GAAP income from
operations, non-GAAP net income, free cash flow ("FCF") and non-GAAP
diluted net income per share. Dropbox has provided a reconciliation of
each non-GAAP financial measure used in this earnings release to the
most directly comparable GAAP financial measure. Non-GAAP cost of
revenue, gross profit, operating expenses, income from operations, and
net income differs from GAAP in that it excludes stock-based
compensation expense and employer payroll tax expense relating to the
release of two-tier RSUs with respect to the three months ended March
31, 2018. Non-GAAP general and administrative expense also excludes
expense related to a donation of common stock to the Dropbox Foundation
with respect to the three months ended June 30, 2017. Non-GAAP net
income also includes the income tax effect of these adjustments. The
income tax effect of these adjustments is derived by calculating a
non-GAAP tax rate by excluding the impact of our non-GAAP items from
non-GAAP net income, and then applying GAAP standards, including our net
operating losses, to the resulting non-GAAP net income. Free cash flow
differs from GAAP net cash provided by operating activities in that it
treats capital expenditures as a reduction to net cash provided by
operating activities. Non-GAAP diluted net income per share differs from
GAAP diluted net loss per share in that the numerator utilizes the
non-GAAP net income as described above, and the weighted-average shares
used in the computation include certain shares that are excluded from
the GAAP diluted net loss per share calculation because their effect
would have been anti-dilutive.
Dropbox's management uses these non-GAAP financial measures to
understand and compare operating results across accounting periods, for
internal budgeting and forecasting purposes, for short and long-term
operating plans, and to evaluate Dropbox's financial performance and the
ability to generate cash from operations. Management believes these
non-GAAP financial measures reflect Dropbox's ongoing business in a
manner that allows for meaningful period-to-period comparisons and
analysis of trends in Dropbox's business, as they exclude expenses that
are not reflective of ongoing operating results. Management also
believes that these non-GAAP financial measures provide useful
supplemental information to investors and others in understanding and
evaluating Dropbox's operating results and future prospects in the same
manner as management and in comparing financial results across
accounting periods and to those of peer companies.
We believe that the non-GAAP financial measures non-GAAP cost of
revenue, gross profit, operating expenses, income from operations, net
income, and diluted net income per share are meaningful to investors
because they help identify underlying trends in our business that could
otherwise be masked by the effect of the expenses that we exclude.
We believe that FCF is an indicator of our liquidity over the long term,
and provides useful information regarding cash provided by operating
activities and cash used for investments in property and equipment
required to maintain and grow our business. FCF is presented for
supplemental informational purposes only and should not be considered a
substitute for financial information presented in accordance with GAAP.
FCF has limitations as an analytical tool, and it should not be
considered in isolation or as a substitute for analysis of other GAAP
financial measures, such as net cash provided by operating activities.
Some of the limitations of FCF are that FCF does not reflect our future
contractual commitments, excludes investments made to acquire assets
under capital leases, includes capital expenditures related to our new
corporate headquarters, and may be calculated differently by other
companies in our industry, limiting its usefulness as a comparative
measure.
The use of non-GAAP cost of revenue, gross profit, operating expenses,
income from operations, net income, free cash flow, and diluted net
income per share measures has certain limitations as they do not reflect
all items of income, expense, and cash expenditures, as applicable, that
affect Dropbox's operations. Dropbox compensates for these limitations
by reconciling the non-GAAP financial measures to the most comparable
GAAP financial measures. Additionally, we have provided supplemental
disclosures in our reconciliation of net cash provided by operating
activities to free cash flow to include capital expenditures related to
our new corporate headquarters, net of tenant improvement allowances.
These non-GAAP financial measures should be considered in addition to,
not as a substitute for or in isolation from, measures prepared in
accordance with GAAP. Further, these non-GAAP measures may differ from
the non-GAAP information used by other companies, including peer
companies, and therefore comparability may be limited. Management
encourages investors and others to review Dropbox's financial
information in its entirety and not rely on a single financial measure.
View source version on businesswire.com: https://www.businesswire.com/news/home/20180809005740/en/
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