Dropbox Stock Slumps As Downbeat Guidance Takes Sheen Off Q4 Beat: Retail Confidence Nosedives

Dropbox, Inc. (DBX) shares plunged over 9% in Thursday’s after-hours session after the content collaboration platform provider provided below-consensus forward guidance and reported tepid user metrics. The fiscal year 2025 fourth-quarter results, however, came in above estimates. 

The San Francisco, California-based company’s key financial metrics are as follows:

• Adjusted earnings per share (EPS): $0.73 Vs. $0.50 Last year and $0.62 Finchat-compiled consensus estimate 
• Revenue: $643.6 million, up 14% from last year’s $635 million, the consensus of $638.61 million and the guidance of $637 million to $640 million.

Among operational metrics, annual recurring revenue (ARR) rose 2% year over year (YoY) to $2.574 billion, roughly in line with the third quarter’s growth. The average revenue per paying user was $14.06, up from $138.83 in the year-ago quarter. 

At the end of the quarter, the number of paying users was 18.22 million, which was flat with the third quarter. 

The adjusted operating margin expanded YoY to 36.9% from 32.2%.

Co-founder and CEO Drew Houston said, “We delivered solid results in 2024 and made a lot of progress bringing our [artificial intelligence] AI-powered product, Dash for Business, to market and restructuring our core business to be even more efficient.’’

He noted that early feedback from its Dash users was encouraging.

Dropbox guided first-quarter revenue in the range of $618 million to $621 million and adjusted operating margin of about 38.5%. It expects full-year revenue of $2.465 billion to $2.480 billion and an adjusted operating margin of 37.5%-38%.

The quarterly and annual revenue guidance trailed the Street estimates of $630.44 million and $2.554 billion.

On Stocktwits, retail sentiment toward Dropbox stock plummeted to ‘extremely bearish’ (2/100), marking the lowest level in over a year, from the ‘bearish’ mood that prevailed a day ago. The message volume stayed ‘extremely high.’

A retail watcher called the earnings call “horrific,” with the management announcing cuts across its business.

Another user geared for extended sell-off over the next one to two weeks.

Dropbox stock has gained 6.1% so far this year.

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