Dropbox (NasdaqGS:DBX) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Dropbox, Inc. (NasdaqGS:DBX) is scheduled to report Q3 earnings results after markets close for trading on November 5, 2020.

The company is expected to report earnings of $0.19/share on revenue of $483.6 million. The consensus earnings per share (EPS) of $0.19/share is based on a poll of 13 analysts and represents a growth in eps of 42.8% over the same quarter last year, when the company reported earnings of $0.13/share.

The revenue forecast of $483.6 million based on a poll of 11 analysts implies a year-over-year (YoY) growth in revenue of 12.9%. Last year the company reported $428.2 million in revenue for the quarter.

Expected to report EPS growth of 42.8% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $483.64 $428.20 12.9%
EPS $0.19 $0.13 42.8%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Dropbox, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.17 $0.22 28.5% Beat
Q1, 2020 $0.13 $0.17 29.0% Beat
Q4, 2019 $0.14 $0.16 13.2% Beat
Q3, 2019 $0.11 $0.13 20.1% Beat
Q2, 2019 $0.08 $0.10 17.8% Beat
Q1, 2019 $0.06 $0.10 55.5% Beat
Q4, 2018 $0.08 $0.10 23.3% Beat
Q3, 2018 $0.06 $0.11 79.1% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by falling −10.9%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 6, 2020 $23.22 $20.69 −10.9% Decline
May 7, 2020 $20.34 $21.88 7.5% Increase
February 20, 2020 $18.32 $22.45 22.5% Increase
November 7, 2019 $20.56 $19.80 −3.7% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −3.19, the model suggests that the company is not likely to be an earnings manipulator. A value of −3.19 implies a 0.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Dropbox, Inc. is currently trading at $18.69/share, down −1.8% for the day. The company is trading at approximately 77.6% of its 52-week high of $24.14/share. The company’s stock price is down −9.7% since the last earnings report and down −6.5% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 39.23 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:DBX Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 232.89 and a forward P/E multiple of 24.37.

Dropbox, Inc.’s current share price also implies a price-to-book (P/B) multiple of 9.62. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $18.69
P/E Ratio 232.9x
P/E Ratio (Fwd) 24.4x
PEG Ratio 1.4
Total Debt / Total Capital 12.2%
Levered Free Cash Flow $409.1 million
EV / EBITDA 43.9x

Finbox

Dropbox, Inc. is a mid-cap stock with a market capitalization of $7.866 billion and a total enterprise value of $7.838 billion. The company operates in the Information Technology sector and the Software industry.

Dropbox, Inc. provides a collaboration platform worldwide. The company’s platform allows individuals, teams, and organizations to collaborate and sign up for free through its website or app, as well as upgrade to a paid subscription plan for premium features. As of December 31, 2019, it had approximately 600 million registered users across 180 countries. The company was formerly known as Evenflow, Inc. and changed its name to Dropbox, Inc. in October 2009. Dropbox, Inc. was founded in 2007 and is headquartered in San Francisco, California.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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