Dropbox (DBX) Reports Q1: Everything You Need To Know Ahead Of Earnings

Cloud storage and e-signature company Dropbox (Nasdaq: DBX) will be reporting earnings tomorrow afternoon. Here's what to expect.

Dropbox met analysts' revenue expectations last quarter, reporting revenues of $635 million, up 6% year on year. It was a weak quarter for the company, with decelerating customer growth and a miss of analysts' ARR (annual recurring revenue) estimates. It lost 50,000 customers and ended up with a total of 18.12 million.

Is Dropbox a buy or sell going into earnings? Read our full analysis here, it's free.

This quarter, analysts are expecting Dropbox's revenue to grow 2.9% year on year to $628.6 million, slowing from the 8.7% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.50 per share.

The majority of analysts covering the company have reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Dropbox has a history of exceeding Wall Street's expectations, beating revenue estimates every single time over the past two years by 0.9% on average.

Looking at Dropbox's peers in the productivity software segment, some have already reported their Q1 results, giving us a hint as to what we can expect. Five9 delivered year-on-year revenue growth of 13.1%, beating analysts' expectations by 2.9%, and RingCentral reported revenues up 9.5%, topping estimates by 1%. Five9 traded up 2.1% following the results.

Read our full analysis of Five9's results here and RingCentral's results here.

Growth stocks have seen elevated volatility as investors debate the Fed's monetary policy, and while some of the productivity software stocks have fared somewhat better, they have not been spared, with share prices down 2.6% on average over the last month. Dropbox is up 1.4% during the same time and is heading into earnings with an average analyst price target of $29.3 (compared to the current share price of $23.65).

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