Dropbox beats expectations for its first quarterly check-in with Wall Street

Dropbox built its debut as a public company earlier this year and today passed through its first milestone of reporting its results to public investors, and it more or less beat expectations defined for Wall Street on the top and bottom line.

The company reported more revenue and beat expectations for earnings that Wall street set, bringing in $316.3 million in revenue and appearing to pick up momentum among its paying user base. It also said it had 11.5 million paying users, a jump from last year. However, the stock was largely flat in extended trading. One small negative signal — and it definitely appears to be a small one — was that its GAAP gross margin slipped slightly to 61.9% from 62.3% a year earlier. Dropbox is a software company that’s supposed to have great margins as it begins to ramp up its own hardware, but that slipping margin may end up being something that investors will zero in on going forward. Still, as the company continues to ramp up the enterprise component of its business, the calculus of its business may change over time.

This is a pretty important moment for the company, as it was a darling in Silicon Valley and rocketed to a $10 billion valuation in the early phases of the Web 2.0 epoch but began to face a ton of criticism as to whether it could be a robust business as larger companies started to offer cloud storage as a perk and not a business. Dropbox then detected itself going up against companies like Box and Microsoft as it worked to create an enterprise business, but all this was behind closed doors — and it wasn’t clear if it was able to successfully maneuver its way into a second big business. Now the company is beholden to public shareholders and has to show all this in the open, and it serves as a good barometer of not just storage and cooperation business, but also some companies that are looking to drastically simplify workflow processes and convert that into a real business( like Slack, for example ).

Here’s the final scorecard for the company 😛 TAGEND

Q1 revenue: $316.3 million, compared to Wall Street estimates of $308.7 million( up 28% year over year .)

: $316.3 million, compared to Wall Street estimates of $308.7 million( up 28% year over year .) Q1 earnings: 8 cents per share adjusted, compared to Wall Street estimates of 5 cents per share adjusted.

: 8 cents per share adjusted, compared to Wall Street estimates of 5 cents per share adjusted. Paying users: 11.5 million, up from 9.3 million in the same period last year.

: 11.5 million, up from 9.3 million in the same period last year. GAAP gross margin: 61.9%, down from 62.3% last year in the same period last year.

Non-GAAP gross margin: 74.2%, up from 63.5% in the same period last year.

: 74.2%, up from 63.5% in the same period last year. Free cash flow: $51.9 million, down from $56.5 million in the same period last year.

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