Earnings Preview: Dropbox

Dropbox DBX will be releasing its next round of earnings this Thursday, November 05. For all of the relevant information, here is your guide for Thursday's Q3 earnings announcement.

Net Income, Earnings, And Earnings Per Share

Earnings and EPS are useful metrics of profitability. Total earnings also known as net income is equal to total revenue minus total expenses. Dividing net income by the total number of shares outstanding yields EPS.

Earnings And Revenue

Dropbox EPS will likely be near $0.18 while revenue will be around $483.64 million, according to analysts. Dropbox EPS in the same period a year ago totaled $0.13. Revenue was $428.20 million.

What Are Analyst Estimates And Earnings Surprises, And Why Do They Matter?

Analysts who cover this company will publish forward-looking estimates of its revenue and EPS each quarter. Averaging together every EPS and revenue prediction that each analyst makes about a company in a quarter yields the "consensus estimates." A company posting earnings or revenue above or below the consensus estimate is known as an "earnings surprise" and may move the stock by a considerable margin.

The analyst consensus estimate would represent a 38.46% increase in the company's EPS figure. Sales would be up 12.95% from the same quarter last year. Dropbox's reported EPS has stacked up against analyst estimates in the past like this:

Stock Performance

Shares of Dropbox were trading at $18.2 as of November 03. Over the last 52-week period, shares are down 10.64%. Given that these returns are generally negative, long-term shareholders are probably down going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Dropbox is scheduled to hold the call at 17:00:00 ET and can be accessed here.