Dropbox expects the decline in the first quarter, operating margin, shares fall

(Reuters) – the file-sharing and storage company Dropbox Inc forecast a decline in the current quarter, an operating margin from a year earlier, sending the shares down almost 11 percent in the extended trade.

The Dropbox-app-logo on a mobile phone in this illustration picture October 16, 2017. REUTERS/Thomas White/Image/File Photo

The weak margin outlook overshadowed a better-than-expected quarterly profit and revenue, and the current quarter revenue forecast that came in above estimates.

“Margin guidance reflects conservatism,” DA Davidson’s analyst Rishi Jaluria said.

Some investors can pick on the net additions of 400,000 paying customers, which was above consensus, but less than last year, Jaluria said. Dropbox added 580,000 paying customers in the quarter a year earlier.

Shares of the San Francisco-based company, that the rally of more than 25 percent so far this year, a decrease of 10.5 percent to $22.90 in the extended trade.

Dropbox weather forecast first quarter adjusted operating margins of 7 percent and 8 percent, compared with 10.9 percent last year.

The company, which competes with the Alphabet Inc, Google, Microsoft Corp. and Box Inc, forecast current-quarter revenue between $379 million and $382 million. Analysts had expected $377 million.

Dropbox said it had 12.7 million subscribers as of Dec. 31, beating analysts ‘ average estimate of 12.54 million, according to FactSet.

The company has reported an average revenue of $119.61 per user, beating estimates of € 118.8, according to the IBES data of Refinitiv.

Started as a free service for sharing and storing photos, music and other large files, Dropbox now offers a range of enterprise software, services and is betting on international expansion for the growth of the user.

In the last month, the company said it would buy electronic signature company HelloSign for $230 million in cash, aiming to expand the portfolio of workflow-related products.

Quarterly loss reduced to $9.5 million in Dropbox the fourth financial report as a publicly traded company, of € 37.7 million a year earlier. The company is yet to make a profit, which is common for startups that invest in growth.

Excluding items, the company earned 10 cents per share, beating estimates of 8 cents.

The total turnover increased with 23 percent to $375.9 million, above estimates of $370 million.

Reporting Munsif Vengattil in Bengaluru; Editing by Shinjini Ganguli

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