Dropbox Requires Significant Measures And Time To Resolve Go-To-Market Rigor, Product Integration, Analyst Says

Credit Suisse analyst Rich Hilliker initiates coverage on Dropbox, Inc DBX with an Underperform rating and a price target of $20.
Over nearly two decades, Dropbox has created a thoughtful, well-architected platform and amassed an impressive following with strong brand recognition.
He appreciated what Dropbox has built profoundly and expects the company to remain visible in the content collaboration and services landscape.
Yet he also questioned the company's ability to capture the future share of content workloads meaningfully as he saw significant measures and time to resolve its lackluster go-to-market rigor and product integration and add compelling platform depth.
He believes Dropbox's intention and vision are much more mature than its level of integration, the sophistication of its go-to-market strategy, and suitable product packaging today.
He avidly believes a company must spend to grow, and Dropbox's model confirms it.
Accordingly, net new paid customer additions have moderated, and Dropbox's magic number and burn productivity have consistently declined, suggesting productivity is stalling.
He believes the integration efforts of HelloSign and DocSend are in the early stages, with redundant systems, a fragmented sales force, and utterly distinct branding until October 2022.
The analyst believes this is due, in part, to consistent leadership turnover, with nearly ten named senior executives departing the firm in the past four years.
Finally, except for free cash flow, results have already achieved its 2024 guidance – suggesting only marginal investment to accelerate product innovation to combat feature commoditization, go-to-market improvements, and increase its platform power.
Price Action: DBX shares traded lower by 0.78% at $22.22 on the last check Tuesday.

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