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Factors Likely to Influence Dropbox's (DBX) Earnings in Q4

Zacks Equity Research

Dropbox Inc. DBX is expected to release fourth-quarter fiscal 2018 results on Feb 21.

Notably, the company beat the Zacks Consensus Estimate in three of the trailing four quarters, recording average positive surprise of 88.9%.

In the last reported quarter, the company reported non-GAAP earnings of 11 cent surpassing the Zacks Consensus Estimate of 6 cents per share. Revenues were $360.3 million, outpacing the Zacks Consensus Estimate of $352 million. Revenues also increased 26% on a year over year basis, primarily due to higher user growth and ARPU expansion.

Dropbox, Inc. Price and EPS Surprise

 

Dropbox, Inc. Price and EPS Surprise | Dropbox, Inc. Quote

What to Expect

For the fourth quarter of fiscal 2018, Dropbox expects revenues between $367 million and $370 million.

The Zacks Consensus Estimate for earnings and revenues is currently pegged at 8 cents and $369.6 million, respectively.

Let’s see how things are shaping up prior to this announcement.

Factors to Consider

Dropbox is a file backup service that offers cloud-based file management, storage systems and client software. The company’s continuous efforts to strengthen cloud-based and AI technologies are likely to drive the top line. The company’s focus on helping users access and synchronize files as well as use applications through multiple devices is enhancing user experience.

Recently, Dropbox completed the acquisition of HelloSign. Together, Dropbox and HelloSign will enable better experience to Dropbox users, and simplify workflows for millions of customers.

Dropbox has also announced various partnership programs of late. The company’s partnership with Moovly Media Inc. and Zoom Video Communications is noteworthy. The alliance is making it easier for people and organizations to work with files on the go.

Additionally, the company’s partnerships with Hewlett Packard Enterprise Company, Ingram Micro and Adobe Systems will help Dropbox to market their products easily and expand in newer markets.  Dropbox’s extended partnerships and strong focus on product innovation and expansion is likely to favor fourth-quarter results.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. Zacks Rank #4 (Sell) or 5 (Strong Sell) stocks are best avoided. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Dropbox has an Earnings ESP of 0.00% and a Zacks Rank #3.

Stocks With a Favorable Combination

Here are some companies you may want to consider as our model shows that these stocks have the right combination of elements to post an earnings beat:

Royal Bank Of Canada RY has an Earnings ESP of +1.82% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pinnacle West Capital Corporation PNW has an Earnings ESP of +4.17% and a Zacks Rank #2.

Allison Transmission Holdings, Inc. ALSN has an Earnings ESP of +5.94% and a Zacks Rank #3.

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