Dropbox (DBX) AI Stock Analysis

• Market Cap: $7.82B
• Dividend Yield: N/A
• Average Volume (3M): 4.22M
• Price to Earnings (P/E): 18.8
• Beta (1Y): 1.06
• Revenue Growth: 1.86%
• EPS Growth: 6.21%
• Country: US
• Employees: 2,693
• Sector: Technology
• Sector Strength: 48
• Industry: Software
• EPS (TTM): 1.40
• Shares Outstanding: 224,824,680
• 10 Day Avg. Volume: 6,813,178
• 30 Day Avg. Volume: 4,215,537
• PEG Ratio: 3.02
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.07
• Price to Cash Flow (P/CF): 9.10
• P/FCF Ratio: 8.70
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $31.25
• Price Target Upside: 18.73% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 7

Dropbox's solid financial performance, bolstered by strong cash flow and strategic corporate actions, provides a stable foundation. However, technical analysis indicates short-term challenges, and valuation is modestly attractive. Strategic focus and resilience are evident, but risks such as declining users and FX pressures need monitoring.

Positive Factors

AI Integration

Dropbox is focusing on AI integration and scaling up Dropbox Dash, emphasizing innovation in its platform.

Share Repurchase

Dropbox announced a new $1.2 billion share repurchase program, reflecting confidence in its stock.

Negative Factors

Revenue Decline

Revenue guidance for the full year came in below expectations by roughly $80 million, attributed to reduced investment in FormSwift.

Dropbox Business Overview & Revenue Model

Company Description

Dropbox, Inc. is a collaboration platform that's transforming the way people and teams work together. It offers following products: Dropbox Basic, Plus, Professional and Business. The Dropbox Basic is the simple, powerful home for photos, videos, docs, and other files. Its users also get access to new product Dropbox Paper, a collaborative workspace that helps teams create and share early ideas, and work with any type of content, in one centralized place. The Dropbox Plus provides unrivalled sync along with 1 TB of space, powerful sharing features, and increased control. The Dropbox Professional allows independent workers to store, share, and track their work from one place. The Dropbox Business is designed for small to enterprise level businesses, which users get full visibility and control over how critical work files are accessed and shared while letting team members continue to use the products. Dropbox was founded by Andrew W. Houston and Arash Ferdowsi in June 2007 and is headquartered in San Francisco, CA.

How the Company Makes Money

Dropbox makes money primarily through its subscription-based revenue model. Users can access basic services for free but are encouraged to upgrade to paid plans that offer additional storage, features, and capabilities. The company's key revenue streams include individual users subscribing to Dropbox Plus and Family plans, as well as teams and enterprises opting for Dropbox Business and Advanced plans. Dropbox also generates revenue from its HelloSign e-signature service and other productivity tools. Partnerships with technology companies and integration with third-party applications enhance the platform’s functionality, driving user engagement and retention, which in turn supports the company's revenue growth.

Dropbox Financial Statement Overview

Summary

Dropbox exhibits solid financial health with strong revenue growth and cash flow generation. High profitability margins are countered by slightly declining net profits. The balance sheet poses risks due to negative equity and high leverage but is mitigated by substantial cash reserves.

Income Statement

Dropbox shows strong financial performance with consistent revenue growth, evidenced by a 1.86% increase in TTM. The gross profit margin stands at 82.53%, indicating effective cost management. However, the net profit margin slightly decreased to 17.75% in TTM. Despite this, the company maintains solid EBIT and EBITDA margins at 19.08%, showcasing operational efficiency.

Balance Sheet

Dropbox's balance sheet reflects a high debt-to-equity ratio due to negative stockholders' equity, indicating financial risk. Despite this, the company has improved its equity position over time. The equity ratio is negative, suggesting liabilities exceed assets, which is a concern. However, the company maintains a substantial cash reserve, offering liquidity.

Cash Flow

Dropbox demonstrates robust cash flow generation with a 14.83% growth in free cash flow. The operating cash flow to net income ratio is strong at 1.98, indicating excellent conversion of income to cash. The free cash flow to net income ratio of 1.93 further underscores efficient cash management.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
2.55B	2.50B	2.32B	2.16B	1.91B
	Gross Profit
2.10B	2.02B	1.88B	1.71B	1.50B
	EBIT
486.20M	383.50M	531.70M	274.40M	519.40M
	EBITDA
486.20M	553.50M	688.80M	463.30M	678.70M
	Net Income Common Stockholders
452.30M	453.60M	553.20M	335.80M	-256.30M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.59B	1.36B	1.34B	1.72B	1.12B
	Total Assets
3.33B	2.98B	3.11B	3.09B	2.39B
	Total Debt
2.03B	2.03B	2.29B	2.37B	1.12B
	Net Debt
705.40M	1.42B	2.06B	1.84B	804.60M
	Total Liabilities
4.08B	3.15B	3.42B	3.39B	2.05B
	Stockholders Equity
-752.40M	-165.80M	-309.40M	-293.90M	333.80M
Cash Flow		Free Cash Flow
871.60M	759.10M	762.40M	700.90M	490.50M
	Operating Cash Flow
894.10M	783.70M	797.30M	729.80M	570.80M
	Investing Cash Flow
443.80M	395.20M	-48.50M	-524.80M	-233.60M
	Financing Cash Flow
-586.60M	-799.20M	-1.04B	16.20M	-577.70M

Dropbox Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 26.32
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DBX, the sentiment is Negative. The current price of 26.32 is below the 20-day moving average (MA) of 29.91, below the 50-day MA of 30.36, and above the 200-day MA of 26.04, indicating a neutral trend. The MACD of -1.43 indicates Positive momentum. The RSI at 28.40 is Positive, neither overbought nor oversold. The STOCH value of 6.61 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DBX.

Dropbox Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MSFT	81 Outperform	$2.89T	31.30	30.64%	0.81%	15.04%	12.38%
ADBE	78 Outperform	$193.98B	35.94	39.42%	―	11.02%	4.96%
GOOGL	74 Outperform	$2.09T	21.17	30.80%	0.36%	13.89%	38.99%
ZM	73 Outperform	$22.64B	23.40	11.31%	―	3.05%	55.96%
BOX	69 Neutral	$4.81B	41.77	1086.23%	―	4.09%	299.27%
DBX	68 Neutral	$7.82B	18.77	-60.11%	―	1.86%	6.21%
Sector *	59 Neutral	$22.39B	11.53	-18.05%	2.31%	5.00%	-25.89%

Dropbox Corporate Events

Dropbox Reports Q4 2024 Financial Results and Strategic Moves

Dropbox reported its financial results for the fourth quarter and fiscal year 2024, showing a modest increase in revenue and a robust free cash flow. The company highlighted its progress with its AI-powered product, Dash for Business, and its ongoing efforts to restructure its core operations to improve efficiency. The year marked significant financial activities, including a $2 billion credit agreement and share repurchases totaling $1.2 billion, which reflect Dropbox’s strategic focus on enhancing shareholder value and operational strength.

Dropbox Appoints Warren Jenson to Board of Directors

On January 17, 2025, Dropbox appointed Warren Jenson to its Board of Directors and Audit Committee. Jenson brings extensive experience from iconic companies undergoing major transitions, which is expected to be beneficial as Dropbox invests in growth initiatives like Dropbox Dash. His past roles include leadership positions at Amazon.com, Electronic Arts, and Nielsen, highlighting his capability to lead companies through strategic transformations. This appointment signals Dropbox’s commitment to navigating its business maturation and leveraging new opportunities in the digital landscape.

Dropbox Secures $2 Billion Loan for Strategic Growth

Dropbox has entered into a Credit and Guaranty Agreement, securing up to $2 billion in term loans, with Blackstone Credit & Insurance as the lead arranger. This agreement, which includes a $1.0 billion initial borrowing and a share repurchase program of $1.2 billion, aims to support working capital, corporate purposes, and shareholder returns, while positioning Dropbox to meet or exceed its financial guidance for Q4 and the fiscal year 2024.