Dropbox reports $316M in revenue and beats expectations for its first quarterly check-in with Wall Street

Dropbox made its debut as a public company earlier this year and today passed through its first milestone of reporting its results to public investors, and it more or less beat expectations set for Wall Street on the top and bottom line.

The company reported more revenue and beat expectations for earnings that Wall Street set, bringing in $316.3 million in revenue and appearing to pick up momentum among its paying user base. It also said it had 11.5 million paying users, a jump from last year. However, the stock was largely flat in extended trading. One small negative signal — and it definitely appears to be a small one — was that its GAAP gross margin slipped slightly to 61.9% from 62.3% a year earlier. Dropbox is a software company that’s supposed to have great margins as it begins to ramp up its own hardware, but that slipping margin may end up being something that investors will zero in on going forward. Still, as the company continues to ramp up the enterprise component of its business, the calculus of its business may change over time.

This is a pretty important moment for the company, as it was a darling in Silicon Valley and rocketed to a $10 billion valuation in the early phases of the Web 2.0 era but began to face a ton of criticism as to whether it could be a robust business as larger companies started to offer cloud storage as a perk and not a business. Dropbox then found itself going up against companies like Box and Microsoft as it worked to create an enterprise business, but all this was behind closed doors — and it wasn’t clear if it was able to successfully maneuver its way into a second big business. Now the company is beholden to public shareholders and has to show all this in the open, and it serves as a good barometer of not just storage and collaboration businesses, but also some companies that are looking to drastically simplify workflow processes and convert that into a real business (like Slack, for example).

Here’s the final scorecard for the company:

  • Q1 revenue: $316.3 million, compared to Wall Street estimates of $308.7 million (up 28% year over year.)
  • Q1 earnings: 8 cents per share adjusted, compared to Wall Street estimates of 5 cents per share adjusted.
  • Paying users: 11.5 million, up from 9.3 million in the same period last year.
  • GAAP Gross margin: 61.9%, down from 62.3% last year in the same period last year.
  • Free cash flow: $51.9 million, down from $56.5 million in the same period last year.

Dropbox was largely considered to be a successful IPO, rising more than 40% in its trading debut. That does mean that it may have left some money on the table, but its operating losses have been largely stable, even as it looks to woo larger enterprise customers as it — which is a bit of a taller order than its typical growth amid consumers that’s heavily driven by organic growth. Those larger enterprise customers offer more stable, and larger, revenue streams than a consumer base that faces a variety of options as many companies start to offer free storage. The company is now worth well over that original $10 billion valuation as a public company. Dropbox says it has more than 500 million users.

Since going public, the stock has had its ups and downs, but for the most part hasn’t dipped below that significant jump it saw from day one. Keeping that number propped up — and growing — is an important part of growing a business as a public company as it waves off more intense scrutiny and pressure for change from public shareholders, as well as offering competitive compensation packages for incoming employees in order to attract the best talent. It’s also good for morale as it offers a kind of grade for how the company is doing in the eyes of the public, though CEOs of companies often say they are committed toward long-term goals. The company’s shares are up around 11% since going public.

While there have been a wave of enterprise IPOs this year, including zScalar and Pluralsight’s upcoming IPO, Dropbox was largely considered to be a potential gauge of whether the IPO window was still open this year because of its hybrid nature. Dropbox started off as a consumer company based around a dead-simple approach of hosting and sharing files online, and used that to build a massive user base even as the cost of cloud storage was rapidly commoditized. But it also is building a robust enterprise-focus business, and continues to roll out a variety of tools to woo those businesses with consistent updates to products like its document tool Paper. Last month, the company started rolling out templates, as it looked to make traditional workflow processes easier and easier for companies in order to capture their interest much in the same way it captured the interest of consumers at large.

Pandora nears 6 million paid subscribers as it chases profit

In the face of stern competition from the likes of Spotify and Apple Music, Pandora managed to show some growth in its latest earnings report. Paid subscribers for Pandora Plus and Pandora Premium, the on-demand feature that launched last March, hit…

Equity podcast: Stocks swing after earnings for Tesla, Apple, Spotify, Snap

It was another big week for earnings on “Equity,” TechCrunch’s podcast about venture capital and the tech business. But this week, it wasn’t all good news.

Spotify stumbled after its first quarterly report since joining the stock market. Tesla shares were down after Elon Musk’s unusual earnings call. Snap hit a record low after failing to gain traction with its redesign.

Apple, however, surprised Wall Street when iPhone sales didn’t disappoint. We also recapped the successful IPOs for DocuSign and Smartsheet.

Our special guest this week was M.G. Siegler, general partner at GV (formerly Google Ventures). In a previous life, he wrote for TechCrunch.

We also had TechCrunch editor Connie Loizos, who will be helping out with the show now that I’m leaving. Yes, that’s right, I’m sad to say that it’s my last episode of “Equity.”

I’ve accepted a new opportunity that I’m excited about (announcing it soon), but I will miss the fun times we’ve had on the show.

Somehow we’ve managed to have over a million downloads since launching “Equity” in March of last year. Thank you for tuning in!

And don’t worry, the show will go on. The remaining “Equity” crew will keep you informed.

If you haven’t subscribed already, check it out on iTunes and pretty much every other podcast platform.

Alibaba beats forecasts with 61% growth and predicts more of the same for the next year

Alibaba is forecasting yet more growth for its business after it beat analyst forecasts with its fourth-quarter results.

Revenue came in at 61.9 billion RMB ($9.9 billion), an increase of 61 percent year-over-year, which topped a 59.6 billion RMB prediction from analysts polled by S&P Global Market Intelligence. The company’s net income for the quarter did drop, however, to 6.6 billion RMB ($1.1 billion) from 9.9 billion RMB one year previous on account of increased investment activity.

Alibaba earned 24.51 RMB per share for its full fiscal year 2018, with total revenue of 250.3 billion RMB and 58 percent annual growth.

The firm expects that impressive rate to be held into its next financial year. Alibaba CFO Maggie Wu said she expects “overall revenue growth above 60 percent, reflecting our confidence in our core business as well as positive momentum in new businesses.”

The company said its annual base of active years rose by 37 million to reach 552 million; its monthly active user count reached 617 million, up by the same factor of 37 million.

Breaking things down it was a familiar story. The company’s core commerce business delivered the bulk of the revenue — 214 billion RMB, $34 billion for the quarter — while its cloud computing business was again the star performer, notching 100% growth to record its first $2 billion (13.4 billion RMB) revenue quarter.

Alibaba has always been keen to invest, but during the last quarter it doubled down on a range of initiatives.

The firm is taking an option to buy one-third of Ant Financial, which resulted terminated a long-standing revenue-sharing agreement that some analysts believe to be worth as much as one billion RMB ($160 million) per quarter. While other impacting deals included the full buyout of food delivery services Ele.me, for upwards of $5 billion, as part of an offline retail push in China and, in Southeast Asia, a $2 billion investment in Lazada, which saw original Alibaba co-founder Lucy Peng installed as new CEO.

Costly? Maybe. But these ventures are what makes CFO Wu and others in management optimistic that Alibaba can sustain its growth. That’s been a key question since its blockbuster IPO in 2014 and Alibaba has long invested in international expansion and new revenue channels in China to offset a demand on its core business.

Alibaba Group had an excellent quarter and fiscal year, driven by robust growth in our core commerce
business and investments we have made over the past several years in longer-term growth initiatives,” added Alibaba CEO Daniel Zhang.

Pandora shares up 8% after surprise earnings beat

Pandora’s quarterly earnings report was music to investor’s ears.

The digital radio platform reported a better-than-expected first quarter report after the bell on Thursday, sending shares up 8% in after-hours trading.

Wall Street liked that the company showed a sizable increase in subscriber revenue, posting $104.7 million, a 63% increase from last year. Pandora has 5.63 million paid listeners, up 19% from the same timeframe in 2017.

By contrast, Apple Music says it has 40 million subscribers and Spotify has 75 million, so Pandora is a distant third in terms of paid users.

But the competition is already reflected in Pandora’s stock price. It closed Thursday at $5.75, which is up a buck for the past month. It’s also substantially beneath the $37 per share that the stock was trading at in 2014. Its market cap is currently $1.45 billion.

In addition to subscribers, Pandora makes money from its unpaid users via ads. The company had 72.3 million active listeners, bringing in $319.2 million in revenue. Analysts had expected $304.3 million.

Its adjusted loss per share was 27 cents, well above the negative 38 cents that Wall Street forecast.

“Pandora is exactly where we want to be: at the center of a growing market with huge potential,” said Roger Lynch, CEO of Pandora, in a statement.

 

 

 

Spotify touts 75 million subscribers in first quarterly earnings report

Spotify made its New York Stock Exchange debut last month, and today the streaming service announced its first earning report as a public company. As part of its pre-filing paperwork, we already knew the company had amassed 170 million monthly users,…

Tesla: Model 3 production could hit 5,000 per week in two months

One of the major stories about Tesla's car business has been its struggle to build sufficient quantities of its Model 3 electric car. In a just-released earnings report the company said that prior to its most recent shutdown, it had managed to build…

Tesla beats expectations with $3.4 billion in revenue

Tesla reported its Q1 2018 earnings today, posting adjusted losses of $3.35 per share with revenues on $3.4 billion. This is beat, as analysts expected Tesla to report a loss of $3.48 a share with revenues of $3.22 billion.

Tesla ended Q1 with $2.7 billion in cash. In September 2017, Tesla stock hit a record high of $389.61 a share. At market close today, Tesla was trading at $301.15. In after-hours, Tesla is trading around $305.

Tesla also provided some updates to its Model 3 production, noting it hit 2,270 cars produced per week for three straight weeks in April.

“Even at this stage of the ramp, Model 3 is already on the cusp of becoming the best-selling mid-sized premium sedan in the US, and our deliveries continue to increase,” Tesla CEO Elon Musk and CFO Deepak Ahuja wrote in a letter to investors. “Consumers have clearly shown that electric vehicles are simply more desirable when priced on par with their internal combustion engine competitors while offering better technology, performance and user experience.”

Analysts, regulators and customers alike have been paying close attention to Tesla over the past few months. In March, a Tesla owner died following a car crash that involved the Model X’s Autopilot mode.

In April, after cooperating with the National Transportation Safety Board for the investigation, the NTSB removed Tesla as a party. That’s because the NTSB was unhappy with the way Tesla released information pertaining to the crash to the public.

“The NTSB took this action because Tesla violated the party agreement by releasing investigative information before it was vetted and confirmed by the NTSB,” the NTSB wrote in a press release. “Such releases of incomplete information often lead to speculation and incorrect assumptions about the probable cause of a crash, which does a disservice to the investigative process and the traveling public.”

Meanwhile, Musk admitted to over-automouting the production of Model 3 cars. That admission came following Bernstein analysts Max Warburton and Toni Sacconaghi arguing Tesla was overusing automation in the final production of Model 3 assembly.

In April, Tesla said it was able to double the weekly Model 3 production rate over Q1 “by rapidly addressing production and supply chain bottlenecks, including several short factory shutdowns to upgrade equipment.” Though, Tesla did miss its first quarter production target of 2,500 cars per week. By the end of Q2, Tesla is targeting a Model 3 production rate of 5,000 cars per week.

Model 3 production updates

Just as Tesla did in Q1, it plans to take planned downtime as part of its Model 3 production process. Prior to the downtime in April, Tesla said it had hit a record of producing 4,750 Model 3 vehicles in two weeks.

Once Tesla hits its ideal production rate of 5,000 Model 3 cars per week, the plan is to increase that goal to 10,000 Model 3 cars produced per week.

“In the end, this is all about having factories that are producing the world’s highest quality cars as quickly and as cost-effectively as possible, and with as close to zero injuries as we can possibly get,” the investor letter states. “Our automation strategy is key to this and we are as committed to it as ever.”

As we mentioned earlier, however, Musk has previously said that Tesla over-relied on automation for the production of Model 3 cars. That’s something he still stands by, saying Tesla mistakenly added “too much automation too quickly” early in the process.

Musk and Ahuja added:

In those select areas where we have had challenges ramping fully automated processes, such as portions of the battery module line, part of the material flow system, and two steps of general assembly, we have temporarily dialed back automation and introduced certain semi-automated or manual processes while we work to eventually have full automation take back over.

Model S and Model X demand is “very strong”

Tesla Model S

Although much attention has been paid to the Model 3, Tesla said demand for the Model S and Model X is still quite strong. In Q1, Tesla had its highest order number ever, with demand exceeding supply. Tesla said it produced 24,728 Model S cars and X vehicles, while delivering a total of 21,815 of them.

“Short-term operational and logistical issues led to an increase in the number of Model S and Model X vehicles in transit to customers at the end of Q1,” the letter states.

Developing…