[tomhoward]

This is the wrong question to ask about a company that still has growth potential.

If there is still potential for growth, it is irrational to declare profits; by doing so you're foregoing the opportunity for bigger revenues (and gross profits) in the future and leaving the way open for a hungrier competitor.

It's a valid question to ask whether they could be profitable if they ceased all investment in growth, and I would encourage you to explore that question. They're a listed company so their financials are public.

FWIW their share price is above the IPO price, so the markets seem comfortable.

[yitchelle]

>> If there is still potential for growth, it is irrational to declare profits; by doing so you're foregoing the opportunity for bigger revenues (and gross profits) in the future and leaving the way open for a hungrier competitor.

Dropbox, being a public traded company, must declare their financials. If they wanted to keep their financials a secret, they should have stayed private.

However, I don't get why you see growth (or potential growth) is tied to profit declaration. Can you explain a bit more? TIA.

[Sohcahtoa82]

Assume growth costs money.

If people believe there's room for growth, then earning profit implies you're wasting money. The money kept as profit could have been spent on growth. Money spent on growth is not included in profits.

To put it another way...

If you have a factory and produce 10,000 widgets that cost $10 to make and you sell them all for $100 each, then you've made $900,000. But if you spend all $900,000 on factory expansion because you know there's a demand for at least 1 million widgets, then you've made $0 in profit.

These numbers cause constant bickering when it comes to stocks. When people were talking about Amazon not being profitable, it's really because all the money they made was being re-invested back into the company.

People make noise about Tesla not being profitable, claiming it's stock is extremely overvalued. Well, if they completely eliminated R&D, stopped trying to improve batteries, automation, self-driving capabilities, etc., they'd probably be quite profitable.

Hence why people claim you shouldn't be declaring profits if there's still growth potential. If you're a publicly traded company, yeah your finances are declared publicly, but in this case, "declaring profits" means that your financial reports should be showing very little profit. If you're showing profit, it means growth is being limited.

[ebikelaw]

Pulling out of a nosedive is a neat trick at an airshow, but it's less fun when the plane slams into the ground. Maybe you think Dropbox is on a trajectory to turn a profit, but we won't know for a few more quarters. It also remains to be seen how resilient their business might be against macroeconomic downturns.

[tomhoward]

Such determination to sneer!

Dropbox is not in any kind of nosedive. They have positive free cash flow margins that have grown steadily for three years [1]. That is precisely the opposite of a nosedive.

You'd have a point if we were talking about Uber, but we're not, we're talking about Dropbox, a company that has solid and improving financials, which is why it's trading at a healthy premium on its IPO price.

[1] https://medium.com/@alexfclayton/dropbox-ipo-s-1-breakdown-3...