Dropbox helped end the USB stick era, but the cloud is becoming more crowded

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

Matt Winkelmeyer | Dropbox | Getty Images

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A year after graduating from MIT in 2006, Drew Houston began collaborating with Arash Ferdowsi in hopes of creating one of the first cloud-based file-sharing platforms that would eliminate the annoyances of physical USB sticks. The result was Dropbox, a company that has since made a name for itself as one of the leading organizations and collaboration tools in the world.

Today, Dropbox claims to have more than 700 million registered users in more than 180 countries and regions worldwide. The company had 2021 revenues of $2.2 billion and is a five-time CNBC Disruptor 50 company.

Aiming to cut down on a lot of work and help organizations stay in sync, Dropbox offers a range of systems that include cloud storage platforms, password managers, and computer backup systems. It has expanded its range of acquisition platforms such as HelloSign in January 2019, Valt in November 2019 and DocSend in March 2021.

For the most recent quarter, Dropbox reported revenue of $591 million with net income of $83.2 million. Over 17.5 million users pay for its services, and the company has stated that more than 90% of its revenue comes from subscription purchases by individual consumers.

“We’re particularly pleased with the results of the changes to our team’s plans and are pleased with our progress in innovating around new products and driving the launch of multiple products, including the release of Capture to all Dropbox users and the launch of the rebranded Dropbox,” said Houston, who is now CEO of Dropbox, in a statement. “As we look to 2023 and beyond, I am proud of our team’s execution of our strategy while maintaining a healthy balance of growth and profitability.”

Drop box went public in March 2018, listing a highly anticipated $756 million IPO on the Nasdaq. Dropbox was one of the largest IPOs in the technology space at the time, and was valued at more than $12 billion on the first day of trading. His performance since an initial climb has been rocky.

As one of the first companies to make the move to a virtual workspace early in the pandemic, Dropbox announced its “Virtual First” setup for remote work in October 2020, requiring employees to be off 90% of the time to work remotely. The program, which officially launched in April 2021, was a significant shift for the company that once flaunted perks like award-winning cuisine in its cafeteria and a world-class gym and yoga studio, all free for employees. The change also cost the San Francisco-based company nearly $400 million in real estate, rendering it unprofitable in the fourth quarter of 2021.

Despite some reports that the company is seeing high turnover rates due to previous in-office bonuses being taken away, Dropbox has picked up “boomerang” employees and brought many former employees back to the company because of job flexibility offers, Houston said at the CNBC Work Summit in October.

“We were able to hit well above our weight class,” Houston said at the CNBC Work Summit. “I think the companies that offer that flexibility will be able to outperform, hold and outperform those that don’t.”

Dropbox continues to face many competitors in the cloud space — Google, Microsoft, and Apple, to name a few of the most notable, as well as other former IPO startups. Crate. The company is forecasting 2022 revenue of $2.3 billion and fourth-quarter revenue of between $592 million and $595 million. But the stock remains well below its first day of trading in 2018, at about half the value of its highest market peak, and has been caught up in the tech downturn that has sent many former high-flying, high-growth startups plummeting.

“We’ve always lived in a competitive environment… and most importantly, all of our growth has happened in that environment,” Houston said at the time of Dropbox’s IPO. “We don’t see Amazon in our space. You know, things can change. We don’t count anyone out.”

To create long-term value, Dropbox is building momentum by promoting new products and acquisitions, Houston said on CNBC’s “TechCheck” in November 2021. The company plans to roll out more of its products to existing customers in hopes of increasing the number of paid products to increase users on its platform, Houston said.

“We’ve certainly made great strides since going public, and we have a lot of opportunities ahead of us,” Houston told TechCheck.

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