What This Analyst Expects From Dropbox's Q1

Dropbox Inc. DBX is scheduled to report its first-quarter results after Thursday's market close and should report a strong beat-and-raise quarter, according to DA Davidson.

The Analyst

DA Davidson's Rishi Jaluria maintains a Buy rating on Dropbox' with an unchanged 12- to 18-month price target of $36 and a five-year price target of $43.

The Thesis

Dropbox is modeled to report a non-GAAP EPS of 2 cents per share on revenue of $308.7 million, Jaluria said in a research note. The consensus estimate calls for 5 cents per share on revenue of $308.7 million.

The relatively new public company -- shares IPO'd on March 23 -- is modeled to report the following metrics the analyst says is conservative and likely beatable:

• Net paying user adds of 450,000;
• Average revenue per user of $109.99;
• Calculated billings of $323.7 million;
• Non-GAAP gross margin to rise 780 basis points from a year ago to 71.3 percent; and
• Free cash flow (including capital lease payments) of $48.9 million.

The management team is expected to discuss the following topics during the conference call: conversion of individual paying users to business users, traction with Dropbox Paper and the overall competitive landscape.

Price Action

Shares of Dropbox were trading higher by 2.4 percent at $30.11 early Tuesday afternoon.

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