(Reuters) - Dropbox Inc (DBX.O) on Thursday reported better-than-expected third quarter results and forecast current-quarter revenue above analysts’ estimates, as the file sharing and storage firm benefits from an expanded customer base that pays more.
The company’s shares rose 8 percent to $26.75 in extended trading.
Dropbox, started in 2007 as a free service to share and store photos, music and other large files, has worked to build up its enterprise software offering, and now carries gross margins above 75 percent.
The company, which competes with the likes of Alphabet’s (GOOGL.O) Google, Microsoft (MSFT.O) and Amazon.com (AMZN.O), forecast fourth-quarter revenue in the range of $367 million to $370 million, beating estimates of $363.7 million, according to IBES data from Refinitiv.
“Our strategy going forward will be to continue to drive revenue growth through a combination of paying user conversion and ARPU (average revenue per user) expansion,” Chief Financial Officer Ajay Vashee told analysts on a post-earnings call.
Dropbox had 12.3 million paying subscribers at the end of the third quarter, slightly above estimates of 12.2 million, according to FactSet.
The company, reporting its third quarterly results after its blockbuster market debut in March, reported ARPU of $118.6, beating estimates of $116.97.
“It signals to me that Dropbox is having success in getting paying users on higher tier offerings,” DA Davidson analyst Rishi Jaluria said.
The company’s loss narrowed to $5.8 million, or 1 cent per share in the quarter ended Sept. 30, from 14.1 million, or 7 cents per share, a year earlier.
Excluding items, the company earned 11 cents per share, beating estimates of 6 cents.
Total revenue rose 26 percent to $360.3 million, above estimates of $352.7 million.
Reporting by Munsif Vengattil in Bengaluru; Editing by Maju Samuel