You've successfully subscribed to Insights
Great! Next, complete checkout for full access to Insights
Welcome back! You've successfully signed in.
Success! Your account is fully activated, you now have access to all content.
Success! Your billing info is updated.
Billing info update failed.

How High Can Dropbox Fly?

Dropbox popped after The Information named them as a possible acquisition target. Even if it's not true, the recent rally still might have room to run.

Caleb Dismuke

Dropbox ($DBX) has quietly put in a stellar year for both its stock performance and business operations. Its stock is up 30% YTD compared to gains of 13% for the S&P 500 and 6% for its closest competitor, Box ($BOX).

What's its Chart Telling us?

Dropbox ($DBX) chart
  • Since September 2018, Dropbox has traded a $16-$26 range. Now, price is bumping up against the $24-$26 resistance level.
  • If price fails to eclipse $26, we could see a move towards the lower end of the range near $17.50.
  • I'm looking for a move above the $24-$26 resistance level and a retest of the post-IPO high at $43.50. That's a 67% upside move from $26.

Q3 2020 highlights

Q3 2020 Q3 2019 YoY change (%)
Revenue $487.4M $428.2M 14%
ARR $1.9B $1.7B 12%
Paying users 15.25M 14M 9%
ARPU $128.03 $123.15 4%
GAAP gross margin 78.8% 75.5% N/A
GAAP operating margin 6.2% (4.3)% N/A
GAAP net income $32.7M ($17.0)M N/A
Free cash flow $187.0M $102.5M 82%
  • ARR = annual recurring revenue
  • ARPU = Average revenue per paying user

Paying users and ARPU (bolded) are key metrics Dropbox uses to measure the health of its business.

Valuation multiples

COMPANY Price/Sales (NTM)
Dropbox ($DBX) 4.5x
Box ($BOX) 3.4x
Atlassian ($TEAM) 29.8x
Zoom ($ZM) 33.6x

The Latest on Dropbox