As you might know, Dropbox, Inc. (NASDAQ:DBX) recently reported its quarterly numbers. It looks like a credible result overall - although revenues of US$631m were what the analysts expected, Dropbox surprised by delivering a (statutory) profit of US$0.39 per share, an impressive 60% above what was forecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Taking into account the latest results, Dropbox's eleven analysts currently expect revenues in 2024 to be US$2.54b, approximately in line with the last 12 months. Statutory earnings per share are expected to plummet 23% to US$1.18 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$2.55b and earnings per share (EPS) of US$0.97 in 2024. Although the revenue estimates have not really changed, we can see there's been a sizeable expansion in earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
There's been no major changes to the consensus price target of US$29.00, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Dropbox, with the most bullish analyst valuing it at US$36.00 and the most bearish at US$22.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Dropbox's revenue growth is expected to slow, with the forecast 1.1% annualised growth rate until the end of 2024 being well below the historical 11% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 13% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Dropbox.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Dropbox's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Dropbox's revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$29.00, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Dropbox. Long-term earnings power is much more important than next year's profits. We have forecasts for Dropbox going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with Dropbox (including 1 which is concerning) .
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