Dropbox, Inc. (DBX) | Investment Case

1. Company Snapshot

1.a. Company Description

Dropbox, Inc.provides a content collaboration platform worldwide.Its platform allows individuals, families, 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, 2021, the company had approximately 700 million registered users.It serves customers in professional services, technology, media, education, industrial, consumer and retail, and financial services industries.The company was formerly known as Evenflow, Inc.

and changed its name to Dropbox, Inc.in October 2009.Dropbox, Inc.

was incorporated in 2007 and is headquartered in San Francisco, California.

Show Full description

1.b. Last Insights on DBX

Dropbox's recent performance was driven by its strong Q3 earnings beat, with quarterly earnings of $0.74 per share, surpassing the Zacks Consensus Estimate of $0.64 per share. The company's solid cash flow and share buybacks highlight its financial resilience. Institutional investors, such as Asset Management One Co. Ltd. and Y Intercept Hong Kong Ltd, have shown confidence in the company, purchasing new positions in Dropbox. Additionally, the company's financial health and growth attributes make it an attractive investment opportunity.

1.c. Company Highlights

Last Price	29.78
Change Percentage	-0.53%
Open	30.03
Previous Close	29.94
Market Cap ( Millions)	8371
Volume	1814440
Year High	33.33
Year Low	24.42
M A 50	29.6
M A 200	28.42

FCF Yield	10.95%
Dividend Yield	0.00%
ROE	-43.09%
Debt / Equity	-212.56%
Net Debt / EBIDTA	319.74%
Price To Book	-5.12
Price Earnings Ratio	15.61
Price To FCF	9.13
Price To sales	3.31
EV / EBITDA	13.8

2. Dropbox's Q3 2025 Earnings: A Strong Performance

Dropbox reported a total revenue of $634 million, a decline of 70 basis points year-over-year, while constant currency revenue declined 120 basis points year-over-year to $631 million. Non-GAAP net income was $197 million, up 3% year-over-year, and diluted EPS was $0.74, beating estimates of $0.64. The company's non-GAAP operating margin was up meaningfully year-over-year, reflecting its focus on operational efficiency.

Publication Date: Nov -08

                                    📋 Highlights
                                    Revenue Performance::
                                                Q3 total revenue declined 70 bps YoY to $634M, but constant currency revenue dropped 120 bps to $631M, excluding FormSwift, with slight growth driven by individual SKUs.
Dash Product Advancements::
                                                Search latency reduced by 75%, multimodal capabilities expanded via Mobius Labs, and 60% of managed Dash users engaged 2+ days/week; self-serve version priced at $19/user/month.
Operational Efficiency::
                                                Non-GAAP net income rose 3% YoY to $197M, with diluted EPS at $0.74, and operating margin improved meaningfully due to efficiency initiatives.
Guidance Revisions::
                                                Full-year revenue guidance raised by $18M (as-reported) and $17M (constant currency), targeting $2.511B–$2.514B, with unlevered free cash flow expected to exceed $1B.
User Metrics & ARPU::
                                                Paying users fell 64,000 QoQ to 18.07M due to downsell and reduced FormSwift investment, while ARPU increased to $139.07, driven by FX tailwinds.

                                

Revenue Growth and User Base

Total ARR was $2.536 billion, down 1.7% year-over-year and 1.5% on a constant currency basis. The company exited the quarter with 18.07 million paying users, a sequential decline of approximately 64,000 paying users. Average revenue per paying user was $139.07, with ARPU increasing sequentially primarily due to FX rate tailwinds.

Dash: A Key Growth Driver

The company's AI tool, Dash, is showing strong early engagement, with 60% of managed Dash weekly active users using it at least 2 days a week. Dash is being integrated into the Dropbox app, bringing its search, chat, and stacks directly into the FSS experience. As Andrew Houston mentioned, "the basic value propositions are resonating with customers, including universal search, AI that knows about users' companies, and unique features like stacks and protect and control."

Valuation and Outlook

With a P/E Ratio of 16.04 and an EV/EBITDA of 13.01, the company's valuation appears reasonable. The company's guidance for Q4 2025 expects revenue to be in the range of $626 million to $629 million, with a non-GAAP operating margin of approximately 37%. For the full year 2025, the company is raising its as-reported revenue guidance range and expects unlevered free cash flow to be at or above $1 billion.

Future Prospects

The company's focus on Dash and simplifying its Core FSS business is expected to drive growth. The company is investing in headcount, particularly in AI, marketing, and M&A, to accelerate its product roadmap. With a strong business model and a commitment to reducing share count over time, Dropbox is well-positioned for future growth.

3. NewsRoom

Arrowstreet Capital Limited Partnership Buys 605,258 Shares of Dropbox, Inc. $DBX

Dec -03

Source: defenseworld.net

Dropbox: A Mispriced Cash Machine With Hidden Upside

Nov -29

Source: seekingalpha.com

Brandywine Global Investment Management LLC Lowers Stake in Dropbox, Inc. $DBX

Nov -24

Source: defenseworld.net

Aviva PLC Purchases New Position in Dropbox, Inc. $DBX

Nov -14

Source: defenseworld.net

DBX Q3 Earnings Beat Estimates, Revenues Fall Y/Y, Shares Rise

Nov -07

Source: zacks.com

Dropbox, Inc. (DBX) Q3 2025 Earnings Call Transcript

Nov -07

Source: seekingalpha.com

Dropbox (DBX) Q3 Earnings and Revenues Beat Estimates

Nov -06

Source: zacks.com

Dropbox Announces Fiscal 2025 Third Quarter Results

Nov -06

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (17.50%)

6. Segments

Internet Information Providers

Expected Growth: 18.0%

The growth rate is slightly higher than the global average due to the increasing demand for cloud storage and collaboration tools, driven by the shift to remote work and digital transformation. The segment is well-positioned to capitalize on this trend, with a strong brand and robust security measures. The expected growth rate is supported by the growing need for flexible and secure file storage and sharing solutions.

7. Detailed Products

Dropbox

Cloud storage service that allows users to store and access files from anywhere

Dropbox Paper

A collaborative document-editing tool that allows teams to create and edit documents together in real-time

Dropbox Business

A cloud storage solution designed for businesses, providing advanced security, integration, and administrative features

Dropbox Plus

A premium cloud storage plan that offers additional storage, advanced security, and priority support

HelloSign

An electronic signature tool that allows users to sign and send important documents digitally

DocSend

A document sharing and tracking tool that allows users to share and track documents securely

8. Dropbox, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Dropbox's services are highly specialized and there are limited substitutes available in the market, reducing the threat of substitutes.

Bargaining Power Of Customers

While customers have some bargaining power due to the availability of alternative cloud storage services, Dropbox's strong brand and large user base mitigate this power.

Bargaining Power Of Suppliers

Dropbox has a diversified supplier base and is not heavily dependent on any single supplier, reducing the bargaining power of suppliers.

Threat Of New Entrants

While there are some barriers to entry in the cloud storage market, new entrants can still pose a threat to Dropbox, especially if they offer innovative features or lower prices.

Intensity Of Rivalry

The cloud storage market is highly competitive, with many established players and new entrants vying for market share, increasing the intensity of rivalry.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	111.97%
Debt Cost	3.95%
Equity Weight	-11.97%
Equity Cost	7.46%
WACC	3.53%
Leverage	-935.71%

11. Quality Control: Dropbox, Inc. passed 6 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Dropbox

A-Score: 6.1/10

Value: 5.9

Growth: 7.9

Quality: 7.4

Yield: 0.0

Momentum: 7.5

Volatility: 7.7

1-Year Total Return ->

Nutanix

A-Score: 5.0/10

Value: 2.8

Growth: 8.3

Quality: 6.1

Yield: 0.0

Momentum: 7.5

Volatility: 5.3

1-Year Total Return ->

Okta

A-Score: 5.0/10

Value: 2.1

Growth: 9.1

Quality: 6.7

Yield: 0.0

Momentum: 7.5

Volatility: 4.3

1-Year Total Return ->

WEX

A-Score: 4.6/10

Value: 5.7

Growth: 6.9

Quality: 6.8

Yield: 0.0

Momentum: 2.0

Volatility: 6.0

1-Year Total Return ->

Squarespace

A-Score: 3.9/10

Value: 4.5

Growth: 5.3

Quality: 5.6

Yield: 0.0

Momentum: 5.0

Volatility: 2.7

1-Year Total Return ->

Akamai

A-Score: 3.8/10

Value: 4.0

Growth: 5.6

Quality: 5.0

Yield: 0.0

Momentum: 1.5

Volatility: 7.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-8.57%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

3.53%

Dropbox, Inc. - US26210C1045

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on DBX

1.c. Company Highlights

Higher Growth

Better Quality

Medium Volatility

Earnings Beats

Stable Momentum

Weak Momentum

Less Volatile

Strong Momentum

Average Quality

Revenues Beats

2. Dropbox's Q3 2025 Earnings: A Strong Performance

Revenue Growth and User Base

Dash: A Key Growth Driver

Valuation and Outlook

Future Prospects

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (17.50%)

6. Segments

Internet Information Providers

Expected Growth: 18.0%

7. Detailed Products

Dropbox

Dropbox Paper

Dropbox Business

Dropbox Plus

HelloSign

DocSend

8. Dropbox, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Dropbox, Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

29.78$

Current Price

29.78$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA