Docsend acquisition6/9/2023 ![]() ![]() The addition of an enterprise tool like DocSend will further flex Dropbox's muscles in the enterprise space, helping it catch up to its rival Box (the latter of which has long touted superior security capabilities). ![]() What I find most appealing about DocSend is the fact that it's a widely used tool for confidential information sharing (such as in legal trials or in M&A deals). In March, Dropbox announced and closed the acquisition of a company called DocSend, paying $165 million for it (which I view as a fairly modest price tag for the capacities that DocSend adds to the Dropbox platform). DocSend acquisition opens up a world of possibilities.We also like the fact that in February, Dropbox unveiled a brand-new $1 billion stock repurchase plan (when the stock was trading closer to the low $20s), which is a significant chunk of Dropbox's ~$10 billion market cap. In addition, the fact that the company has routinely dangled a target of hitting $1 billion in annual FCF by FY24 (roughly double current cash flow levels) while continuously raising operating margins quarter after quarter is a big draw for investors. Dropbox is the bargain basement of the software sector. Growth and paying premiums for growth stocks is out value is in. Cash flow and value orientation is perfect for this cautious stock market.There are two main factors / new updates that I think should continue to propel Dropbox higher in the near term: This rally, in my view, is far from letting up. Dropbox, on the other hand, is up ~20% year-to-date and is trading near 52-week highs, especially after a recent Q1 earnings print that showed strength across a number of fronts: Data by YCharts Suddenly, Dropbox is (quietly) one of the better-performing stocks in the software sector, while all the higher-flying names are still down double-digits (some down to half of their prior highs). ![]() Yet that sentiment has turned on a 180-degree axis this year. Investors criticized the company for its slowing growth, the fierceness of its competition versus Box ( BOX) and Google Drive ( GOOG ), and the general un-excitingness of its file-sharing product. Photo by Drew Angerer/Getty Images News via Getty ImagesÄuring the boom times for the tech sector last year, Dropbox ( NASDAQ: DBX) was a noticeable laggard. ![]()
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