Moreover, the FCF margin is now an astounding 38.4%. That implies it “converted” more than 170% of net income into usable FCF.
However, its FCF of $187 million for the quarter was even higher than the net income of $110 million. 9 Gold Stocks to Buy as Uncertainty Clouds the Election.That represents a very high margin of 22.6%. This past quarter, on a non-GAAP basis, it made $110 million in net income on revenue of $487 million. Fantastic Finances at Dropboxįor example, the company not only expanded its gross margins from 76.7% to 80% over last year (non-GAAP), but its net income went turned positive. I believe that this provides an unusual opportunity for deep value investors to take a meaningful stake in this FCF powerhouse company. The company reported its Q3 earnings and it produced fantastic profits and FCF growth. The company is scheduled to report quarterly results on Thursday afternoon.However, the stock is down $1 per share, or 5% since that article was written. “This, along with the fact that Dropbox does not have a fully developed enterprise sales organization puts them at a significant disadvantage in a market where network effects give first movers a huge advantage.” “We believe the natural market structure for collaboration tools is likely to be a monopoly or duopoly, in which MicrosoftĪre the only two viable contenders,” Chrane wrote. He’s also skeptical that the company will be able to make inroads in the office-collaboration space, which is another part of its growth aims. See also: Match Group stock soars after Tinder shows explosive growth once again Which has high switching costs with its design software, may have more leverage to hike prices without incurring meaningful consumer backlash, in his view, but Dropbox doesn’t enjoy those advantages. Which has “a virtual monopoly” with its editing software, or Autodesk Inc. “Raising prices on a relatively commoditized service (when already at a price disadvantage) seems to be a poor long-term growth strategy at a time when the price of cloud-storage is generally falling,” he wrote.Īccording to Chrane, many software companies will add new features for the same price or even lower prices to create more competitive offerings. Read: Disney sets high bar with new $12.99 streaming bundle for Disney+, ESPN+ and HuluĬhrane is concerned about competition in the file-storage space as well as Dropbox’s decision to raise prices on its Plus plan in May. Shares are down 3.2% in premarket trading.
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