Dropbox is crashing despite beating Wall Street expectations, announces COO Dennis Woodside is leaving – TechCrunch

Dropbox is crashing despite beating Wall Street expectations, announces COO Dennis Woodside is leaving – TechCrunch

Back when Dennis Woodside joined Dropbox as its chief operating officer more than four years ago, the corporate was making an attempt to justify the $10 billion valuation it had hit in its fast rise as a Web 2.zero darling. Now, Dropbox is a public firm with a virtually $14 billion valuation, and it as soon as once more confirmed Wall Street that it’s capable of beat expectations with a now extra strong enterprise enterprise alongside its client roots.

Dropbox’s second quarter outcomes got here in forward of Wall Street’s expectations on each the earnings and income entrance. The firm additionally introduced that Dennis Woodside might be leaving the corporate. Woodside joined at a time when Dropbox was beginning to determine its enterprise enterprise, which it was capable of develop and remodel into a powerful case for Wall Street that it might lastly be a profitable publicly traded firm. The IPO was certainly profitable, with the corporate’s shares hovering greater than 40 % in its debut, so it is sensible that Woodside has basically achieved his job by getting it right into a enterprise prepared for Wall Street.

“I think as a team we accomplished a ton over the last four and a half years,” Woodside mentioned in an interview. “When I joined they were a couple hundred million in revenue and a little under 500 people. [CEO] Drew [Houston] and Arash [Ferdowsi] have built a great business, since then we’ve scaled globally. Close to half our revenue is outside the U.S., we have well over 300,000 teams for our Dropbox business product, which was nascent there. These are accomplishments of the team, and I’m pretty proud.”

The inventory initially exploded in prolonged buying and selling by rising greater than 7 %, although even previous to the market shut and the corporate reporting its earnings, the inventory had risen as a lot as 10 %. But following that spike, Dropbox shares at the moment are down round 5 %. Dropbox is one among quite a few SaaS corporations which have gone public in current months, together with DocuSign, which have seen appreciable success. While Dropbox has managed to make its case with a powerful enterprise enterprise, the corporate was born with client roots and has tried to hold over that simplicity with the enterprise merchandise it rolls out, like its collaboration device Dropbox Paper.

Here’s a fast rundown of the numbers:

  • Q2 Revenue: Up 27 % year-over-year to $339.2 million, in comparison with estimates of $331 million in income.
  • Q2 GAAP Gross Margin: 73.6 %, as in comparison with 65.four % in the identical interval final 12 months.
  • Q2 adjusted earnings: 11 cents per share in contrast, in comparison with estimates of seven cents per share.
  • Paid customers: 11.9 million paying customers, up from 9.9 million in the identical quarter final 12 months.
  • ARPU: $116.66, in comparison with $111.19 identical quarter final 12 months.

So, not solely is Dropbox capable of present that it may possibly proceed to develop that income, the precise worth of its customers is additionally going up. That’s vital, as a result of Dropbox has to indicate that it may possibly proceed to accumulate higher-value prospects — that means it’s regularly shifting up the Fortune 100 chain and getting bigger and extra established corporations on board that may provide it larger and larger contracts. It additionally provides it the room to make bigger strategic strikes, like migrating onto its own architecture late final 12 months, which, in the long term might end up to drastically enhance the margins on its enterprise.

“We did talk earlier in the quarter about our investment over the last couple years in SMR technology, an innovative storage technology that allows us to optimize cost and performance,” Woodside mentioned. “We continue to innovate ways that allow us to drive better performance, and that drives better economics.”

The firm is nonetheless trying to make important strikes within the type of new hires, together with not too long ago saying that it has a brand new VP of product and VP of product advertising, Adam Nash and Naman Khan, respectively. Dropbox’s new group beneath CEO Drew Houston are tasked with persevering with the corporate’s path to cracking into bigger enterprises, which may give it a way more predictable and strong enterprise alongside the typical shoppers that pay to host their recordsdata on-line and entry them from just about wherever.

In addition, there are a pair government modifications as Woodside transitions out. Yamini Rangan, presently VP of Business Strategy & Operations, will change into Chief Customer Officer reporting to Houston, and comms VP Lin-Hua Wu may even report back to Houston.

Dropbox had its first quarterly earnings check-in and slid previous the expectations that Wall Street had, although its GAAP gross margin slipped a little bit and may have offered a slight negative signal for the company. But since then, Dropbox’s inventory hasn’t had any main missteps, giving it extra credibility on the general public markets — and extra sources to draw and retain expertise with compensation packages linked to that inventory.

“Our retention has been quite strong,” Woodside mentioned. “We see strong retention characteristics across the customer set we have, whether it’s large or small. Obviously larger companies have more opportunity to expand over time, so our expansion metrics are quite strong in customers of over several hundred employees. But even among small businesses, Dropbox is the kind of product that has gravity. Once you start using it and start sharing it, it becomes a place where your business is small or large is managing all its content, it tends to be a sticky experience.”

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