Bring on the metaverse, says Dropbox founder and CEO Drew Houston.
"We are building towards a metaverse. I am really excited about the vision," said Houston on Yahoo Finance Live. "Where Dropbox fits in if you are working in that kind of environment or in the metaverse, you need stuff. So for your digital content, Dropbox could help and that is what we are building towards. It is very early. It is a long journey, but it is exciting."
What would Dropbox's role be in the metaverse?
"Our strength is in content so helping get your stuff into that virtual world. So making what document or presentation you want to give... the infrastructure that we've built make that happen. So we're certainly integrating with the metaverse," said Houston. "We want to help you get your stuff in and out of the metaverse from your Dropbox into the metaverse and vice versa, so creating that experience where everybody could be in the same virtual room and everybody could be seeing the same content."
Dropbox didn't need the metaverse to deliver very solid results in the third quarter.
Total sales rose 12.9% from a year ago and beat the top-end of management's guidance amid heightened demand for storage and networking services during the pandemic. Annual recurring revenue increased 12% from a year ago to $2.2 billion. Paying users improved to 16.49 million from 15.49 million last year.
Here is how Dropbox performed compared to analyst estimates for the third quarter.
Net Sales: $550.2 million vs. $544.8 million
Adjusted Diluted EPS: $0.37 vs. $0.35
The company reiterated that it sees $1 billion in free cash flow by 2024. The company exited the third quarter with nearly $2 billion in cash.
Dropbox shares fell about 7% on Friday's session as investors took profits on the news. Houston said market volatility is often the norm on Dropbox earnings days, and isn't concerned by the one-day drop.
Most analysts who were bullish on Dropbox into earnings maintained their views despite the market's reaction to the report.
William Blair analyst Jason Ader, for example, said the "stickiness of Dropbox's technology is under-appreciated. Ader reiterated an Outperform rating on Dropbox.