4 ms·

I noticed the word "profit" doesn't appear anywhere in the article. Will Dropbox ever make money?

B1FF_PSUVM 8y ago
Also, will they ever encrypt files on the client side? (Hey, it's been only nine or ten years evading that question ...)
- Sohcahtoa82 8y ago
  For every user wanting client-side encryption so that Dropbox can't see the content of the files you're storing, there's another user wanting server-side text searching, which isn't possible with client-side encryption. The answer, of course, is to make client-side encryption an option.
scarface74 8y ago
Exactly. It kills me that the definition of a successful company is rarely - being able to deliver a product profitably.
- 101km 8y ago
  They provided a spreadsheet on their investor relations page: https://dropbox.gcs-web.com/static-files/105a910a-1026-4056-912c-1b806b964843 https://dropbox.gcs-web.com/static-files/105a910a-1026-4056-... Losses last three years are: ~300m, ~200m, ~100m. They are going to be profitable by 2020 and their margin is growing, so I don't get this negativity.
  - scarface74 8y ago
    They can predict a lot of things. But in the B2B market, they are competing with much larger companies that can offer the same amount of storage plus a lot more - Google and Microsoft. In the consumer market, they are competing with Google, Microsoft, and Apple. Would you really want to compete against the three most valuable companies in the US where as Steve Jobs said “you’re not a product you’re a feature”?
- tomhoward 8y ago
  This is the kind of dismissal people make when there's nothing left of substance to criticize about a company. But it's an empty dismissal - see my comment above: https://news.ycombinator.com/item?id=17548438 https://news.ycombinator.com/item?id=17548438
  - scarface74 8y ago
    Would you also say the same about Uber? Neither company has proven that there is a demand for their product once they set a price where they can make a profit.
    - tomhoward 8y ago
      This is false in Dropbox's case: While on a GAAP basis, Dropbox is losing money, the company generated $0.18 of non-GAAP earnings per share in 2017, an incredible feat for a software business of their size and growth. Their GAAP operating margin was (10)% in 2017, but the non-GAAP margin was 5%. Their free cash flow margin has been improving dramatically over the past few years, and was at 28% in 2017, up from 16% in 2016 and (11)% in 2015. [1] I wouldn't say the same thing about Uber, because they seem to have a negative operating margin, unlike Dropbox. This is the whole point. Anyone can look at the final result and sneer "unprofitable", but it's meaningless without actually looking at the figures and understanding what their cashflows are. [1] https://medium.com/@alexfclayton/dropbox-ipo-s-1-breakdown-3c74742b10ac https://medium.com/@alexfclayton/dropbox-ipo-s-1-breakdown-3...
tomhoward 8y ago
This is the wrong question to ask about a company that still has growth potential. If there is still potential for growth, it is irrational to declare profits; by doing so you're foregoing the opportunity for bigger revenues (and gross profits) in the future and leaving the way open for a hungrier competitor. It's a valid question to ask whether they could be profitable if they ceased all investment in growth, and I would encourage you to explore that question. They're a listed company so their financials are public. FWIW their share price is above the IPO price, so the markets seem comfortable.
- yitchelle 8y ago
  >> If there is still potential for growth, it is irrational to declare profits; by doing so you're foregoing the opportunity for bigger revenues (and gross profits) in the future and leaving the way open for a hungrier competitor. Dropbox, being a public traded company, must declare their financials. If they wanted to keep their financials a secret, they should have stayed private. However, I don't get why you see growth (or potential growth) is tied to profit declaration. Can you explain a bit more? TIA.
  - Sohcahtoa82 8y ago
    Assume growth costs money. If people believe there's room for growth, then earning profit implies you're wasting money. The money kept as profit could have been spent on growth. Money spent on growth is not included in profits. To put it another way... If you have a factory and produce 10,000 widgets that cost $10 to make and you sell them all for $100 each, then you've made $900,000. But if you spend all $900,000 on factory expansion because you know there's a demand for at least 1 million widgets, then you've made $0 in profit. These numbers cause constant bickering when it comes to stocks. When people were talking about Amazon not being profitable, it's really because all the money they made was being re-invested back into the company. People make noise about Tesla not being profitable, claiming it's stock is extremely overvalued. Well, if they completely eliminated R&D, stopped trying to improve batteries, automation, self-driving capabilities, etc., they'd probably be quite profitable. Hence why people claim you shouldn't be declaring profits if there's still growth potential. If you're a publicly traded company, yeah your finances are declared publicly, but in this case, "declaring profits" means that your financial reports should be showing very little profit. If you're showing profit, it means growth is being limited.

Also, will they ever encrypt files on the client side? (Hey, it's been only nine or ten years evading that question ...)

Sohcahtoa82 8y ago
For every user wanting client-side encryption so that Dropbox can't see the content of the files you're storing, there's another user wanting server-side text searching, which isn't possible with client-side encryption. The answer, of course, is to make client-side encryption an option.

scarface74 8y ago

Exactly. It kills me that the definition of a successful company is rarely - being able to deliver a product profitably.

101km 8y ago
They provided a spreadsheet on their investor relations page: https://dropbox.gcs-web.com/static-files/105a910a-1026-4056-912c-1b806b964843 https://dropbox.gcs-web.com/static-files/105a910a-1026-4056-... Losses last three years are: ~300m, ~200m, ~100m. They are going to be profitable by 2020 and their margin is growing, so I don't get this negativity.
- scarface74 8y ago
  They can predict a lot of things. But in the B2B market, they are competing with much larger companies that can offer the same amount of storage plus a lot more - Google and Microsoft. In the consumer market, they are competing with Google, Microsoft, and Apple. Would you really want to compete against the three most valuable companies in the US where as Steve Jobs said “you’re not a product you’re a feature”?
tomhoward 8y ago
This is the kind of dismissal people make when there's nothing left of substance to criticize about a company. But it's an empty dismissal - see my comment above: https://news.ycombinator.com/item?id=17548438 https://news.ycombinator.com/item?id=17548438
- scarface74 8y ago
  Would you also say the same about Uber? Neither company has proven that there is a demand for their product once they set a price where they can make a profit.
  - tomhoward 8y ago
    This is false in Dropbox's case: While on a GAAP basis, Dropbox is losing money, the company generated $0.18 of non-GAAP earnings per share in 2017, an incredible feat for a software business of their size and growth. Their GAAP operating margin was (10)% in 2017, but the non-GAAP margin was 5%. Their free cash flow margin has been improving dramatically over the past few years, and was at 28% in 2017, up from 16% in 2016 and (11)% in 2015. [1] I wouldn't say the same thing about Uber, because they seem to have a negative operating margin, unlike Dropbox. This is the whole point. Anyone can look at the final result and sneer "unprofitable", but it's meaningless without actually looking at the figures and understanding what their cashflows are. [1] https://medium.com/@alexfclayton/dropbox-ipo-s-1-breakdown-3c74742b10ac https://medium.com/@alexfclayton/dropbox-ipo-s-1-breakdown-3...

tomhoward 8y ago

This is the wrong question to ask about a company that still has growth potential. If there is still potential for growth, it is irrational to declare profits; by doing so you're foregoing the opportunity for bigger revenues (and gross profits) in the future and leaving the way open for a hungrier competitor. It's a valid question to ask whether they could be profitable if they ceased all investment in growth, and I would encourage you to explore that question. They're a listed company so their financials are public. FWIW their share price is above the IPO price, so the markets seem comfortable.

yitchelle 8y ago
>> If there is still potential for growth, it is irrational to declare profits; by doing so you're foregoing the opportunity for bigger revenues (and gross profits) in the future and leaving the way open for a hungrier competitor. Dropbox, being a public traded company, must declare their financials. If they wanted to keep their financials a secret, they should have stayed private. However, I don't get why you see growth (or potential growth) is tied to profit declaration. Can you explain a bit more? TIA.
- Sohcahtoa82 8y ago
  Assume growth costs money. If people believe there's room for growth, then earning profit implies you're wasting money. The money kept as profit could have been spent on growth. Money spent on growth is not included in profits. To put it another way... If you have a factory and produce 10,000 widgets that cost $10 to make and you sell them all for $100 each, then you've made $900,000. But if you spend all $900,000 on factory expansion because you know there's a demand for at least 1 million widgets, then you've made $0 in profit. These numbers cause constant bickering when it comes to stocks. When people were talking about Amazon not being profitable, it's really because all the money they made was being re-invested back into the company. People make noise about Tesla not being profitable, claiming it's stock is extremely overvalued. Well, if they completely eliminated R&D, stopped trying to improve batteries, automation, self-driving capabilities, etc., they'd probably be quite profitable. Hence why people claim you shouldn't be declaring profits if there's still growth potential. If you're a publicly traded company, yeah your finances are declared publicly, but in this case, "declaring profits" means that your financial reports should be showing very little profit. If you're showing profit, it means growth is being limited.