Asset Manager Investing in Global Technology Sector

We're an asset management firm allocating our capital into asset classes benefiting from technological innovation and applications globally. We serve as a family office of a tech professional who has spent over a decade as an entrepreneur, operator, and venture investor across Asia and the US.

Our small team is made up of diverse investment professionals who research, identify, and execute relevant opportunities. We occasionally share some of our investment memos, insights, and analysis here.

Saturday, March 28, 2020

Q1.2020 - Dropbox Has an Underestimated Moat

We had underestimated Dropbox (DBX). As Microsoft OneDrive (MSFT), Google Drive (GOOG), and BOX (BOX) gained traction in the cloud storage market, Dropbox’s pricing strategy back in Q2 last year created uncertainty on its competitiveness. Fast forward a few months, the company just posted a solid FY 2019 earnings report to prove us wrong.

The company grew its revenue by 19% YoY while operating margins expanded by 500 bps YoY. Gross margin also expanded by ~350 bps YoY to 76%, which was only 200 bps away from the lowest end of the long-term model of 78% - 80%. The results tell us that Dropbox has established a pricing power, which we believe comes from its ecosystem-driven growth philosophy and efficient go-to-market. As Dropbox is going beyond cloud storage, we view the aforementioned items as two key near-term catalysts for the stock.

Read the rest of the article here
at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)