Dropbox, Inc.

Dropbox has been showing good resilience in its business especially against the challenging macroeconomic backdrop and managed to deliver an all-around beat, surpassing Wall Street expectations on all counts. Two of their more recent products, Dropbox Backup and Capture, have seen increased usage. They recently updated the price and packaging for their standard and advanced plans, providing their teams’ clients with more security and data protection benefits. Besides, the management sees an opportunity to increase top-of-funnel activity with mobile-focused marketing. They also enhanced their conversion rate in Q2 by using more precise mobile prompts, as mobile devices are a key channel for attracting and converting new basic users. During the quarter, the management improved the user experience by enabling users to view photos directly in the DocSend viewer rather than downloading them from the browser. This improved user experience led to a large rise in image file uploads. Furthermore, despite slowing down after the pandemic boom, HelloSign is still growing strongly. Overall, we give Dropbox a ‘Hold’ rating with a revised target price.