Technology Stocks

CEO Drew Houston Reveals That Dropbox, Inc. (NASDAQ:DBX) Was Bootstrapped At Some Stage And Might Have Got Into ‘Zombie Mode.’

Dropbox, Inc. (NASDAQ:DBX) has announced their financial results for the third quarter of 2018 that ended on September. In a statement after announcing the results, Dropbox CEO and Co-founder, Drew Houston indicated that the company delivered a strong execution in the third quarter which was behind their healthy growth and expansion leading to free cash flow margins.  He adds that Dropbox is equally expected to be transferring the updates and features of their product that the users like depending on their understanding of the consumer needs and the need for the necessary tools to do their best. The CEO also indicated that in addition to their operation niche where they have the best partners they were also expected to be an integral part of their customer workflow.

Drew Houston’s interview

In an interview at the Business Insider IGNITION Conference with US business insider Editor Alyson Shontell, the CEO Drew Huston, gave insight about converting ideas into businesses, the scaling of small companies and also on how to preserve innovation. Drew was appearing in the conversation with Y Combinator Co-founder, Paul Graham, who is also the first investor in DropBox. In the discussion, Drew said that the growth of a company could not be faked because it is a measure of the number of customers the company has and whether they can be satisfied. Drew said that there is no worse thing a failing startup in what he described as a ‘Zombie start-up’ and that Dropbox was bootstrapped at some stage and he feared it might get into ‘zombie mode.’ Growth will always be the metric of measuring the success of a company, and that has been the focus of Dropbox even as they are scaling.

2018 Third quarter financial results

Compared to the third quarter of 2017, this year the company registered a 26% increase in total revenue to around $360.3 million. The increase is due to the increase in the number of paying users which rose to 12.3 million from 10.4 million for the same quarter last year. Equally, there was an increase in the average revenue from $112.05 per paying user to $118. The GAAP gross outlay rose to 75% up from around 68% for the same period in 2017 while the Non-GAAP outlays increased by 4.6% to 12.8% in 2018. Net loss decreased from $14.1 million in 2017 to $5.8 in the third quarter of 2018. Operational outlays were recorded at $128.0 million up from $111.5 million last year while free cash flow rose from $108.3 million in 2017 to $120.0 million in September 2018. The diluted net revenue per share was computed based on a base amount of $420 million for the third quarter of 2018 which is an increase of almost $69.6 million. The basic GAAP and net loss for each share minimally decreased to $0.01 down from $0.07 in 2017 while the non-GAAP net revenue per share rose to $0.11 when compared to last year’s $0.07.

Overall trend of the Dropbox’s share seems bullish, from and is currently trading in a rangebound section. The stock hit a low mid-November and is presently off its lows. The stock price movement still looks bearish. Investors seem disinterested in the stock.

Company outlook

The company expects to give guidance relating to the third quarter financial results that released through a webcast and the Dropbox investor relations in the website.  The company provides investors with information regarding their financial results like the non-GAAP revenue cost, operational costs that include research development, administrative and sales, and marketing expenses.  According to the company, the provision of the non-GAAP financial measures is a means of boosting investor confidence as it helps in identification of business trends that could be hidden by the impact of the expenses that are not shown.

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