Dropbox investors spooked as pivotal executive steps down

DROPBOX shares plunged in extended trading last night despite defying Wall Street forecasts for its second quarter, as it revealed one of its key executives would be leaving next month.

Dropbox said revenue surged 27pc to $339.2m (£264m) in the three months to the end of June, ahead of analyst forecasts for $331m, as its paid user base swelled to 11.9million people, from 9.9million a year earlier, and it made 5pc more revenue from each of those users on average.

Losses at the San Francisco-based company narrowed to $4.1m, from $26.8m a year earlier.

The strong set of quarterly results, its second as a listed company, however, failed to reassure investors, who were shaken by the news that Dennis Woodside, Dropbox’s chief operating officer, would be stepping down from his post by the end of the year.

Mr Woodside had been instrumental leading up to Dropbox’s initial public offering in March, helping to transform the business over his four-year tenure to make it an attractive proposition for Wall Street, and not purely drawing in free users.

Dropbox said Mr Woodside will remain at the company until early September, and then will become an adviser through to the end of the year.

Drew Houston, co-founder and chief executive, said: “We’re grateful for everything Dennis has done for us.

“He’s helped transform Dropbox into a publicly-traded company with over $1bn in annual revenue and 12 offices around the world.” Dropbox said it would not be replacing Mr Woodside, and instead would restructure its leadership team to divide his responsibilities between two new members of its executive team – Yamini Rangan, who will become chief customer officer, and Lin-hua Wu, its vice president of communications.

Shares in the company slumped as much as 10.5pc in after-hours trade, as investors digested the news of the departure.

However, even if that drop is reflected in regular trading today, shares would remain substantially above its IPO price, having risen 64pc since the March float.

Dropbox said it expected revenue to continue growing throughout the year, to come in between $350m and $353m in the third quarter.

It hiked its guidance for the full year, now expecting revenue to be between $1.366bn and $1.372bn, up from $1.1bn in 2017.