Dropbox, Inc. Net Debt / EBITDA jumped on 1,338.6x from 2.4x to 1,341.0x in 2020 and Debt surged on 11.2%
02/18/2021 • About Dropbox, Inc. (
$DBX) • By InTwits
Dropbox, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- Dropbox, Inc. is a fast growth stock: 2020 revenue growth was 15.2%, 5 year revenue CAGR was 26.0% at 2020 ROIC -14.9%
- Dropbox, Inc. motivates its personel by high Stock Based Compensation (SBC): average SBC/Revenue for 2016-2020 was 13.9% while average EBITDA Margin was -1.0% for the sames years
- Dropbox, Inc. has medium CAPEX intensity: 5 year average CAPEX/Revenue was 6.6%. At the same time it's a lot of higher than industry average of 3.0%.
- CAPEX is quite volatile: $80m in 2020, $136m in 2019, $63m in 2018, $25m in 2017, $115m in 2016
- In the last 5 years the company invested considerably less than D&A: $420m vs. $540m
- The company has unprofitable business model: ROIC is -14.9%
- It operates with high leverage: Net Debt/EBITDA is 1,341.0x while industry average is 18.4x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Dropbox, Inc.'s Revenue surged on 15.2%. Revenue growth showed slowdown in 20Q4 - it was 13.0% YoY. Revenue decline was accelerating on average at -6.1 pp per annum in 2016-2020. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 4.0 pp from 11.0% to 15.0% in 2020.
Gross Margin increased on 3.1 pp from 75.3% to 78.3% in 2020. Gross Margin followed a growing trend at 5.8 pp per annum in the last 5 years. SG&A as a % of Revenue decreased on 6.3 pp from 40.3% to 34.0% in 2020. During 2016-2020 SG&A as a % of Revenue topped in 2018 at 51.9% and was declining since that time.
Net Income margin dropped on 10.2 pp from -3.2% to -13.4% in 2020.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 4.2% in 2020. CAPEX/Revenue increased slightly on 1.9 pp from 2.3% in 2017 to 4.2% in 2020. It's average level of CAPEX/Revenue for the last three years was 5.6%. To fuel its fast growth Dropbox, Inc. made large investments to CAPEX (13,350% of EBITDA).
Return on investment
The company operates at negative ROIC (-14.9%) and ROE (-44.9%). ROIC dropped on 11.4 pp from -3.5% to -14.9% in 2020. ROE dropped on 37.8 pp from -7.1% to -44.9% in 2020.
Leverage (Debt)
Debt level is 1,341.0x Net Debt / EBITDA and 1,865.8x Debt / EBITDA. Net Debt / EBITDA surged on 1,338.6x from 2.4x to 1,341.0x in 2020. Debt surged on 11.2% while cash dropped on 42.9%.
Dropbox, Inc. has no short term refinancing risk: cash is higher than short term debt (167.2%).
Management team
Andrew Houston "Drew" is a the company's CEO. Andrew Houston "Drew" has spent 4 months with the company. Dropbox, Inc.'s CFO Timothy Regan "Tim" has spent 6 months years with the company.
Financial and operational results
FY ended 12/31/2020
Dropbox, Inc. ($DBX) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 845 | 1,107 | 1,392 | 1,661 | 1,914 | 15.2% |
| Gross Profit | 454 | 738 | 997 | 1,250 | 1,499 | 19.9% |
| SG&A | 358 | 471 | 723 | 669 | 651 | -2.7% |
| EBITDA | -2 | 68 | -327 | 189 | 1 | -99.7% |
| EBIT | -194 | -114 | -494 | | | |
| Interest expence | 16 | 11 | | | | |
| Tax | 5 | 0 | 5 | | | |
| Net Income | -210 | -112 | -485 | -53 | -256 | |
| Stock Based Compensation | 148 | 165 | 650 | | | |
Balance Sheet
|
|---|
| Cash | 353 | 430 | 519 | 551 | 315 | -42.9% |
| Accounts Payable | 16 | 32 | 33 | | | |
| Short Term Debt | 128 | 103 | 74 | 157 | 188 | 20.2% |
| Long Term Debt | 130 | 72 | 90 | 850 | 931 | 9.5% |
Cash flow
|
|---|
| Capex | 115 | 25 | 63 | 136 | 80 | -41.1% |
Ratios
|
|---|
| Revenue growth | 39.9% | 31.0% | 25.7% | 19.4% | 15.2% | |
| EBITDA growth | -98.8% | -3,684.2% | -580.5% | -157.8% | -99.7% | |
|
|---|
| Gross Margin | 53.8% | 66.7% | 71.6% | 75.3% | 78.3% | 3.1% |
| EBITDA Margin | -0.2% | 6.2% | -23.5% | 11.4% | 0.0% | -11.4% |
| EBIT Margin | -22.9% | -10.3% | -35.5% | | |
| SG&A, % of revenue | 42.4% | 42.6% | 51.9% | 40.3% | 34.0% | -6.3% |
| SBC, % of revenue | 17.5% | 14.9% | 46.7% | | |
| Net Income Margin | -24.9% | -10.1% | -34.8% | -3.2% | -13.4% | -10.2% |
| CAPEX, % of revenue | 13.6% | 2.3% | 4.5% | 8.2% | 4.2% | -4.0% |
|
|---|
| ROIC | | -34.5% | -88.1% | -3.5% | -14.9% | -11.4% |
| ROE | | | | -7.1% | -44.9% | -37.8% |
| Net Debt/EBITDA | | -3.8x | | 2.4x | 1,341.0x | 1,338.6x |
| Interest expence / Average debt | 6.4% | 5.1% | | | | |
People
|
|---|
| Insider ownership | 9.0% | 9.0% | 9.0% | | | |
| Employees | | 1,858 | 2,323 | | | |
| Revenue/Employee, th. $ | | 596 | 599 | | | |
Dropbox, Inc. ($DBX) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 455 | 467 | 487 | 504 | | 18.0% | 16.4% | 13.8% | 13.0% |
| EBITDA | 66 | 53 | 71 | -308 | | 48.3% | 43.4% | 48.9% | -613.9% |
| Net Income | 39 | 18 | 33 | -346 | | - | - | - | - |
Balance Sheet
|
|---|
| Cash | 486 | 334 | 453 | 315 | | 35.4% | -2.8% | 2.1% | -42.9% |
| Short Term Debt | 164 | 166 | 176 | 188 | | 13.5% | 13.0% | 19.9% | 20.2% |
| Long Term Debt | 920 | 923 | 947 | 931 | | 67.7% | 28.1% | 25.5% | 9.5% |
Ratios
|
|---|
| Gross Margin | 77.3% | 78.1% | 78.8% | 79.0% | | 2.9% | 3.7% | 3.3% | 2.5% |
| EBITDA Margin | 14.6% | 11.3% | 14.5% | -61.1% | | 3.0% | 2.1% | 3.4% | -74.5% |
| Net Income Margin | 8.6% | 3.7% | 6.7% | -68.6% | | 10.6% | 9.1% | 10.7% | -67.1% |
Peers in Application Software
Below we provide Dropbox, Inc. benchmarking against other companies in Application Software industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | - | -0.2% | -95.9% | 34.9% | 355,942.4% |
| AudioEye, Inc. ($AEYE) | - | 175.5% | 106.6% | 90.2% | 90.2% |
| Cloudera, Inc. ($CLDR) | - | 57.2% | 42.6% | 28.9% | 65.5% |
| Integrated Ventures Inc ($INTV) | - | - | - | -8.9% | 62.7% |
| Smartsheet Inc. ($SMAR) | - | 64.3% | 66.1% | 59.7% | 52.4% |
| |
|---|
| Median (92 companies) | 12.0% | 14.8% | 15.1% | 19.5% | 14.5% |
|---|
| Dropbox, Inc. ($DBX) | - | 31.0% | 25.7% | 19.4% | 15.2% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Aware, Inc. ($AWRE) | 90.3% | 94.6% | 92.3% | 89.7% | 92.8% |
| Alteryx, Inc. ($AYX) | 81.3% | 83.4% | 91.0% | 90.6% | 91.1% |
| Autodesk, Inc. ($ADSK) | 85.2% | 83.2% | 85.2% | 88.9% | 90.1% |
| Smith Micro Software, Inc. ($SMSI) | 73.2% | 77.9% | 83.5% | 90.9% | 89.9% |
| Cadence Design Systems, Inc. ($CDNS) | 85.9% | 87.8% | 87.9% | 88.6% | 88.6% |
| |
|---|
| Median (89 companies) | 64.2% | 64.4% | 65.3% | 67.9% | 69.4% |
|---|
| Dropbox, Inc. ($DBX) | 53.8% | 66.7% | 71.6% | 75.3% | 78.3% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -1,837.2% | -1,118.0% | -40,379.4% | -23,127.1% | 52.2% |
| j2 Global, Inc. ($JCOM) | 41.7% | 36.5% | 35.7% | 38.6% | 40.5% |
| Intelligent Systems Corporation ($INS) | -5.4% | -12.8% | 33.6% | 43.6% | 40.4% |
| Adobe Inc. ($ADBE) | 31.2% | 34.2% | 35.3% | 35.8% | 39.7% |
| SS&C Technologies Holdings, Inc. ($SSNC) | 34.9% | 37.9% | 27.7% | 38.2% | 38.3% |
| |
|---|
| Median (89 companies) | -5.3% | -4.2% | -3.3% | 2.7% | 7.7% |
|---|
| Dropbox, Inc. ($DBX) | -0.2% | 6.2% | -23.5% | 11.4% | 0.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MicroStrategy Incorporated ($MSTR) | 0.5% | 0.8% | 1.4% | 2.1% | 234.8% |
| Integrated Ventures Inc ($INTV) | - | - | 199.9% | 15.2% | 27.2% |
| Intelligent Systems Corporation ($INS) | 3.8% | 9.7% | 4.3% | 4.9% | 19.2% |
| LivePerson, Inc. ($LPSN) | 5.5% | 7.9% | 8.8% | 16.3% | 11.4% |
| PROS Holdings, Inc. ($PRO) | 4.7% | 0.8% | 0.7% | 2.1% | 11.3% |
| |
|---|
| Median (87 companies) | 2.9% | 2.3% | 2.4% | 2.9% | 2.5% |
|---|
| Dropbox, Inc. ($DBX) | 13.6% | 2.3% | 4.5% | 8.2% | 4.2% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| VirnetX Holding Corp ($VHC) | -210.9% | -256.8% | -416.3% | -247.2% | 137.3% |
| Manhattan Associates, Inc. ($MANH) | 99.3% | 102.5% | 80.9% | 71.7% | 53.4% |
| Citrix Systems, Inc. ($CTXS) | 16.1% | 16.7% | 25.2% | 29.8% | 33.5% |
| Sonic Foundry, Inc. ($SOFO) | -18.1% | -50.6% | -786.4% | - | 31.3% |
| Paycom Software, Inc. ($PAYC) | 75.4% | 51.1% | 47.5% | 47.5% | 28.7% |
| |
|---|
| Median (92 companies) | -9.5% | -10.2% | -9.8% | -4.5% | -1.8% |
|---|
| Dropbox, Inc. ($DBX) | - | -34.5% | -88.1% | -3.5% | -14.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Avaya Holdings Corp. ($AVYA) | - | - | 7.4x | - | 77.9x |
| Alteryx, Inc. ($AYX) | - | - | 2.5x | 6.1x | 32.2x |
| Five9, Inc. ($FIVN) | -6.7x | -8.6x | 7.3x | 5.3x | 17.6x |
| Synchronoss Technologies, Inc. ($SNCR) | - | - | - | - | 11.6x |
| Cornerstone OnDemand, Inc. ($CSOD) | - | - | 5.5x | 2.3x | 10.9x |
| |
|---|
| Median (53 companies) | -0.9x | -0.8x | -0.7x | 0.4x | 0.0x |
|---|
| Dropbox, Inc. ($DBX) | - | -3.8x | - | 2.4x | 1,341.0x |
