Shares of Dropbox Inc. (DBX) - Get Dropbox, Inc. Class A Report tumbled 9.48% to $23.17 Friday after the file sharing and storage company issued disappointing operating margin guidance during its fourth-quarter earnings call.
The San Francisco-based company reported a fourth-quarter loss of $9.5 million, or 2 cents a share, compared with a loss of $37 million, or 19 cents a share, a year ago. Adjusted earnings came to 10 cents a share, up from 3 cents a share a year ago, and beat analysts' expectations of 8 cents.
Revenue grew 23% to $375.9 million, above estimates of $370 million.
For the year, the company reported a loss of $484.9 million, or $1.35 a share. Revenue was reported at $1.39 billion.
For the first quarter, Dropbox said it expects $379 million to $382 million in revenue, while analysts are expecting $377 million. For the full year, the company forecasts $1.63 billion to $1.64 billion in revenue. Wall Street is calling for $1.60 billion.
Dropbox said it expects operating margins to be 7% to 8%, excluding certain items, in the first quarter, while analysts are forecasting 12.1%. Full year 2019, Dropbox said it sees an operating margin of 10.5% to 11.5%, below analysts' estimate of 13.4%.
Chief Financial Officer Ajay Vashee said during a conference call with analysts that the company's first quarter operating margin "is seasonally lower each year and that's really due to higher employee-related costs like the reset of payroll taxes."
Last month, the company said it would buy electronic signature company HelloSign for $230 million in cash.
"I will say looking ahead we expect the impact from HelloSign-related investments as well as the overlapping rent expense that I talked to for our existing and new corporate headquarters to decrease in the second half of the year and for us to resume our trajectory of year-over-year operating margin expansion as we exit 2019," Vashee said.