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> DropBox What's wrong with DropBox and why in the world would you include them with Uber? They had a modest $18m operating loss on $428m in revenue last quart

> DropBox What's wrong with DropBox and why in the world would you include them with Uber? They had a modest $18m operating loss on $428m in revenue last quarter. They have essentially zero red ink concerns right now and their business is still expanding (over the prior three years sales will have increased almost 100% through this fiscal year). Further they have a billion dollars in cash to go with their small trickle of red ink. DropBox could roll into profitable status in any given quarter and going forward, if they wanted to, just by very gently nudging operating expenses. They don't need to, there's basically no benefit to their market valuation in doing that (not until or unless they start spitting off a lot of profit). They're in a position where they're clearly going to let sales growth gradually lift their operating condition to profitable, I'd guess within four quarters or so at their rate of improvement. A lot of companies follow the DropBox approach of allowing sales growth and margin improvement to overtake the operating losses gradually. That is especially desirable when pulling back on expenses might harm sales growth and there is no good reason to do it (ie no cash crunch). See: Salesforce, ServiceNow, Palo Alto Networks, Twitter and Square for recent prominent examples of how this works. It's not uncommon.

scarface74 7y ago
From Dropbox’s own IPO filing: https://qz.com/1214822/dropbox-is-filing-for-a-500-million-ipo-while-warning-it-may-never-be-profitable/ https://qz.com/1214822/dropbox-is-filing-for-a-500-million-i... The company’s prospectus warns it has “a history of net losses”; anticipates increasing expenses and slowing revenue growth; and notes that it “may not be able to achieve or maintain profitability.” To compete, Dropbox is pouring money into research and development to convert non-paying users to paid subscribers, and to enhance collaborative tools. Also like Jobs famously said about DropBox. “They are a feature not a product.” For the same price that you pay for DropBox and 1TB of storage, you can get the full Office 365 suite, for 6 users and a total of 6TB of storage. For personal users and not businesses, Google and Apple offer good enough alternatives cheaper and that integrate better with their ecosystem. Every company you named has a much higher switching cost than Dropbox. You can’t just go to a Twitter competitor because of the network effects.
- lotsofpulp 7y ago
  > For personal users and not businesses, Google and Apple offer good enough alternatives Not until iCloud folder sharing is available.
  - scarface74 7y ago
    Hopefully that’s not what Dropbox is hanging it’s hat on - one point release of iOS 13.

scarface74 7y ago

From Dropbox’s own IPO filing: https://qz.com/1214822/dropbox-is-filing-for-a-500-million-ipo-while-warning-it-may-never-be-profitable/ https://qz.com/1214822/dropbox-is-filing-for-a-500-million-i... The company’s prospectus warns it has “a history of net losses”; anticipates increasing expenses and slowing revenue growth; and notes that it “may not be able to achieve or maintain profitability.” To compete, Dropbox is pouring money into research and development to convert non-paying users to paid subscribers, and to enhance collaborative tools. Also like Jobs famously said about DropBox. “They are a feature not a product.” For the same price that you pay for DropBox and 1TB of storage, you can get the full Office 365 suite, for 6 users and a total of 6TB of storage. For personal users and not businesses, Google and Apple offer good enough alternatives cheaper and that integrate better with their ecosystem. Every company you named has a much higher switching cost than Dropbox. You can’t just go to a Twitter competitor because of the network effects.

lotsofpulp 7y ago
> For personal users and not businesses, Google and Apple offer good enough alternatives Not until iCloud folder sharing is available.
- scarface74 7y ago
  Hopefully that’s not what Dropbox is hanging it’s hat on - one point release of iOS 13.