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Dropbox helped end thumb drive era, however the cloud is getting crowded

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Dropbox CEO Drew Houston speaks onstage throughout the Dropbox Work In Progress Conference at Pier 48 on September 25, 2019 in San Francisco

Matt Winkelmeyer | Dropbox | Getty Images

On this weekly series, CNBC takes a have a look at corporations that made the inaugural Disruptor 50 list, 10 years later.

One yr after graduating from MIT in 2006, Drew Houston began working with Arash Ferdowsi in hopes of making one in every of the primary cloud-based file sharing platforms that might eliminate the annoyances of physical thumb drives. The result was Dropbox, an organization that has now made a reputation for itself as one in every of the leading organization and collaboration tools worldwide.

Today, Dropbox reports having greater than 700 million registered users in greater than 180 countries and regions globally. The corporate brought in $2.2 billion price of revenue in 2021 and is a five-time CNBC Disruptor 50 company.

With goals to cut back busywork and help organizations stay in sync, Dropbox offers cloud storage, password managers and computer backup systems, amongst other capabilities. It has grown its offerings in acquiring corporations akin to HelloSign in January 2019, Valt in November 2019, DocSend in March 2021 and CommandE in October 2021.

In its most up-to-date quarter, Dropbox reported $591 million in revenue with a net profit of $83.2 million. Over 17.5 million users pay for its services, and the corporate has said greater than 90% of its revenue results from individual consumers buying subscriptions. 

“Specifically, we’re pleased with the outcomes of the changes to our team’s plans, and enthusiastic about our progress innovating around latest products and driving multi product adoption, including the discharge of Capture to all Dropbox users and the introduction of the rebranded Dropbox Sign,” Houston, who’s now Dropbox’s CEO, said in an earnings statement. “As we glance towards 2023 and beyond, I’m pleased with our team’s execution towards our strategy while maintaining a healthy balance of growth and profitability.”

Dropbox went public in March 2018, listing a highly-anticipated $756 million IPO on the Nasdaq. One in every of the most important IPOs in tech on the time, Dropbox was valued at greater than $12 billion on its first day of trading. Its performance since an initial surge has been rocky.

As one in every of the primary corporations to embrace the shift to a virtual workplace originally of the pandemic, Dropbox announced its “virtual first” work setup in October 2020, with distant work the “primary experience” for all employees and “day after day default” for individual work. This system, which officially launched in April 2021, was a major shift for the business that after flaunted perks like award-winning cuisine in its cafeteria, and a top-notch gym and yoga studio, all for free of charge for workers.

The change also cost the San Francisco-based company almost $400 million in real estate, turning it unprofitable within the fourth quarter of 2020, but the corporate’s CFO Tim Regan had explained on the Q3 2020 earnings call that while the steps to “de-cost” the true estate portfolio would end in the quarterly impairment charge, generating a return on facilities through subleases and balancing worker population by hiring in low-cost locations would yield a net positive impact to financial statements over time.

Even with some reports that the business is seeing high turnover rates attributed to the previous in-office bonuses being taken away, Dropbox has picked up on “boomerang” employees, bringing many previous employees back to the corporate on account of the workplace flexibility it now offers, Houston said on the CNBC Work Summit in October.

“We have been in a position to punch way above our weight class,” Houston said on the CNBC Work Summit. “I believe the businesses who offer that flexibility are going to give you the option to outrecruit, outretain, outperform ones that do not.”

Dropbox continues to face many competitors within the cloud space – Google, Microsoft and Apple, to call a couple of of essentially the most notable, in addition to fellow former startup to IPO, Box. The corporate is forecasting revenue of $2.3 billion for 2022 and foresees revenue between $592 million and $595 million for the fourth quarter. However the stock stays well below its first-day trade from back in 2018, and at roughly half the worth of its highest market peak, caught up within the tech downturn that has cratered many former high-flying, high growth startups.

“We have at all times lived in a competitive environment … and importantly all our growth has happened in that environment,” Houston said on the time of the Dropbox IPO. “We do not see Amazon in our space. You realize, things can change. We do not count anyone out.”

To create long-term value, Dropbox is constructing on momentum through promoting latest products and acquisitions, Houston said on CNBC’s “TechCheck” in November 2021. The corporate plans to introduce more of its products to existing customers in hopes of accelerating the variety of paid users on its platform, Houston said.

“We actually made a whole lot of progress since we went public, and we now have a whole lot of opportunity in front of us,” Houston told TechCheck.

Correction: Dropbox took an impairment charge on real estate as a consequence of its migration to a virtual-first work model in Q4 2020. The brand new model makes distant work the first experience for workers. An earlier version of this text misstated the earnings period and included an incorrect description of the virtual-first work approach.

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