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Dropbox Inc Class A DBX

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Morningstar’s Analysis

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Dropbox Reports Strong Third Quarter Results Despite a Slowdown in User Additions; Maintain $15 FVE

Brian Colello, CPA Sector Director

Analyst Note

| Brian Colello, CPA |

No-moat Dropbox reported strong third quarter results, as revenue and adjusted EPS exceeded both our expectations and CapIQ consensus estimates. Like other tech companies offering online collaboration tools and cloud storage, Dropbox has seen increased usage as employees across the globe continue to work from home. However, in a space dominated by its well-capitalized competitors such as Microsoft, and Google, we still struggle to see long-term differentiation or a sustainable competitive advantage at Dropbox. As a result, we are maintaining our fair value estimate of $15 per share. With shares trading at a 28% premium to our estimate, we continue to view the company's shares as overvalued.

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Company Profile

Business Description

Dropbox provides cloud-based file storage, sharing, and project collaboration services for individuals and, to a lesser extent, enterprise customers. The company was founded in 2007 and offers a browser service, toolbars, and apps to upload, share, and sync files to the cloud that can be accessible across a number of devices and by a multitude of users. Dropbox allows users to store and access documents, videos, and photos.

1800 Owens Street
San Francisco, CA, 94158
T +1 415 857-6800
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Speculative Growth
Employees 2,801