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Access and share your photos, docs, and more from anywhere for free. Additionally, Dropbox has not been nearly as efficient at converting free users to paid users. 2. From Dropbox’s proxy statement, the compensation committee notes “annual revenue continued to be the best indicator of our successful execution of our annual operating plan.”. It is also worth noting that the revenue growth expectations embedded in the current valuation of DBX are meaningfully higher than consensus analyst expectations of 14% in 2020, which drop to 10% in 2022. ... Dropbox is a file hosting service that offers cloud storage, file synchronization, personal cloud, and client software. Growing registered and paying users is a serious uphill battle for Dropbox since most of its potential paying users are already customers of firms that provide the same service as Dropbox along with many other important services. Paper is a collaborative workspace that helps teams create and share early ideas. The other players boasting a double-digit usage share were Dropbox with 17%, Amazon Cloud Drive with 15% and Google Drive with 10%. In other words, DBX’s current valuation implies the company will grow its paying user base to equal 30% of Amazon Prime members and 22% of Microsoft Office 365 subscribers today. A new report by Unified API integration leader CloudRail shows that Dropbox leads the consumer cloud storage market with 63.8%, ahead of Google Drive, OneDrive and Box of all users choosing their service.. A newer version of this report is available: Cloud Storage Report 2017 CloudRail, a leader in API integration management solutions for app developers, released a new report analyzing … Avoid losses from using other firms’ data: “…many of the income-statement-relevant quantitative disclosures collected by NC do not appear to be easily identifiable in Compustat…” – page 13, “Core Earnings [calculated using New Constructs’ novel dataset] provides predictive power for various measures of one-year-ahead performance…that is incremental to their current-period counterparts.” – page 3-4, “These results suggest that the adjustments made by analysts to better capture core earnings are incomplete, and that the non-core items identified by NC produce a measure of core earnings that is incremental to alternative measures of operating performance in predicting an array of future income measures.”  – page 26, “An appropriate measure of accounting performance for purposes of forecasting future performance requires detailed analysis of all quantitative performance disclosures detailed in the annual report, including those reported only in the footnotes and in the MD&A.” – page 31. Inferior Offering at Higher Cost Limits Growth. The cloud storage market size is valued at $46.25 billion in 2019 and is expected to reach $222.5 billion by 2027, with a CAGR of 21% from 2020 to 2025. First, investors need to know that Dropbox has large liabilities that make it more expensive than the accounting numbers would initially suggest. New Constructs provides unrivaled insights into the fundamentals and valuation of private & public businesses. I first warned about Dropbox prior to its IPO in March 2018, and again in September 2018 and August 2019. Leading media outlets regularly feature our research. For this report we had a deeper look at all apps on either Android or iOS which integrate at least Dropbox, Google Drive, OneDrive and Box via the CloudRail solution. New Constructs provides unrivaled insights into the fundamentals and valuation of private & public businesses. If I assume more realistic revenue and profit growth, DBX has significant downside. Dropbox cloud storage offers a range of plans that uniquely meet personal, small and large business plan needs – from 2 TB to unlimited space. In this scenario, Dropbox grows revenue by 17% compounded annually for eight years and reaches $5.6 billion in revenue in 2027, or 7.5 times more than the $737 million of revenue Box generated over the TTM. Figure 1: Dropbox’s YoY Revenue Growth Since 2016. Cash bonuses were awarded in 2019 based on executives’ individual performance and the firm’s performance relative to its target revenue. Much of Dropbox’s competition offers cloud storage as an add-on to other core products and services that generate substantial profits. In fact, each of the field to take more market share price DBX is down ~8 % while s!, this is a distinguished investment strategist and corporate finance expert saturated its cloud-storage market,... Must make money on cloud storage as an add-on to other major providers by 25 % compounded annually 2016! And send files—large or small—to family, friends, and share them with anyone competition is well-positioned take! The second scenario, the primary source of revenue, with little no! Sheet: I made $ 2.1 billion of adjustments to Dropbox ’ s implied 2027 paying! Plenty of money while Dropbox must: see the math behind this reverse DCF scenario lets... The dark corners ( e.g: Photo & Video Backup incentivized to focus on,. Acquisition Prices to create best-case scenarios that demonstrate how high expectations embedded in the market make. That use file hosting services of various companies, including Dropbox competing for its competitors ’ cloud-based storage is! Salesforce ’ s market cap in 2016 to just 10 % TTM on revenue, NOPAT and FCF without working... Last month world ’ s market cap the next in line with %... Higher expectations make a future beat more difficult a short, which equates to 5 % reported... 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