Shares of Dropbox climbed 20 percent late Friday, a day after the company reported it expects to attain strong profits by end of 2020 and disclosed a $600-million buyback in stocks.
Fueled by consistent subscriber growth, the company earned an adjusted $0.16 a share as total sales increased nearly 20 percent to $447 billion. Wall Street analysts had predicted sales of 14 cents a share on $444 million revenue for the fourth quarter.
Dropbox stock surpassed the $21 price at which the company unloaded shares during its initial public offering in 2018. It had not settled above the $21 level since September. Its profits were up around 18 percent in the three months ended December 31, Dropbox noted in a statement, roughly rising at the same pace as in the third quarter.
The San Francisco, CA-based Cloud storage firm ended the session at $22.45 a share after hitting as high as $23.74 in mid-day session. The rally came even as the Nasdaq and other stock indexes hit the red zone due to worries related to the coronavirus and a potential economic slump.
Dropbox's paying client base soared to 14.3 million from 14 million in the previous period, with average profits per user increasing to 1.5 percent to $125. New York analysts' projections were for 14.2 million paying customers and $123.81 in average sale per user.
Deferred revenue at end of the fourth quarter was pegged at $554 million, just below the $555 million FactSet consensus expectation. The company said the departure of its chief customer officer, Yamini Rangan who has since been hired by HubSpot, in the fourth quarter.
According to chief executive officer Drew Houston, during Dropbox' Q4 earnings call, as the Cloud firm drives the adoption of new products and continue to invest in growth, "we will be driving better productivity and free cash flow this year." The company's target, Houston pointed out, is to become "a very profitable business."
The top executive emphasized that Dropbox has closed the year with over $1.6 billion in yearly revenue, more than 450,000 business teams, and "millions of customers using our new app that keeps Dropbox at the core of their workflows." With its new desktop app, the company seeks to streamline the way users save, share and engage with the content they hold in their Dropbox accounts.
In relation to guidance, Dropbox is anticipating $453 million to $455 million in first-quarter sales. The $454 million figure is above the $448.5 million consensus among Wall Street analysts surveyed by Refinitiv. The company expects to earn more than $1 billion by 2024, finance chief Ajay Vashee said.
