This success has led Dropbox to put its foot on the gas and start reinvesting for more growth. Right now, it looks like it has even surprised itself with how profitable the business has become, already getting to 30% operating margins and raising its full-year free cash flow guidance in Q2. Increased spendingĭropbox has a goal of getting to $1 billion in annual free cash flow and 30% operating margins by 2024. If the HelloSign success is any indication, upselling existing paying users can be a great strategy for Dropbox to grow DocSend usage over the next few years or convince free users to cross the bridge and become paying Dropbox subscribers. HelloSign is increasingly getting integrated into Dropbox subscriptions, which will hopefully enhance the value proposition of being a paying Dropbox user.ĭropbox didn't give any specific numbers on its DocSend acquisition outside of saying the segment "exceeded our internal goals and milestones" for the period. HelloSign signature requests were up 75% year over year in Q2, showing the strong adoption the product is getting, even as the company lapped the Q2 2020 lockdowns. On the Q2 conference call, management gave updates on the progress of some of Dropbox's recent acquisitions, specifically highlighting the success of HelloSign, the digital signature product that is similar to DocuSign. Based on its current market cap of around $13 billion, Dropbox trades at a forward price-to-free cash flow (P/FCF) of 18, which is well below the market average. This led management to raise the company's full-year free cash flow guidance from $670 million-$690 million to $710 million-$730 million. Adjusted operating margin hit 31.9%, up from 20% a year ago, leading free cash flow to hit $216 million in the period. Some of this can be attributed to Dropbox's recent acquisition of DocSend, which closed in March, but either way, paying users grew nicely in the period.ĭropbox also flexed its profit muscles in Q2. Paying users also grew at a solid rate, hitting 16.14 million compared to 14.96 million a year ago. Solid resultsĭropbox's revenue grew 13.5% year over year in Q2 to $530.6 million, and annual recurring revenue hit $2.16 billion by the end of the period.
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