
Dropbox Reaches Key Profit Milestone - pacaro
https://www.bloomberg.com/news/articles/2017-04-26/dropbox-reaches-key-profit-milestone-ceo-says
======
mbesto
> Dropbox Inc.'s chief executive officer said the company is now generating a
> profit excluding interest, taxes, depreciation and amortization

FYI - it's very likely that Dropbox is depreciating a HUGE ($100's of
millions) amount of data center cost.[0] Translated into a more common "AWS
opex cost", might yield a company that isn't really profitable^. EBITDA can be
very misleading (not saying it definitely is in this case) so it's always
worth analyzing it with a grain of salt until you have all of the full
granular details.

[0] - [http://www.datacenterdynamics.com/content-tracks/colo-
cloud/...](http://www.datacenterdynamics.com/content-tracks/colo-
cloud/dropbox-drops-aws-cloud/95872.fullarticle)

^EDIT - I should have said, "might not be profitable yet".

~~~
JumpCrisscross
> _EBITDA can be very misleading_

To illustrate, let's consider a company that buys a $100 data centre every 10
years. (To keep things simple, let's assume the data centre is worthless after
10 years.) The data centre generates $20 in revenues for each of those 10
years.

Instead of showing an $80 loss in year 1 and then a $20 profit in years 2
through 10 (with the expectation of another $80 loss in year 11), accountants
smooth the numbers based on expectations. The $100 data centre cost is
"depreciated" over the expected lifetime of the asset. So one might account
$10 of the data centre's cost to each of its ten years, thereby producing $10
of profit each year. This better reflects economic reality.

Ebitda does not include depreciation. The aforementioned company's Ebitda
would be $20 for years 2 through 10. This is a small problem in year 2. But if
you're an investor in year 10, ignoring that depreciation is the flip side of
capital expenditure, you're in for a nasty shock when year 11's predictable
capital expenditure comes down the line.

~~~
ryanschneider
Judging from mbesto's comment, back when they were on AWS, those costs would
have been included in EBITDA?

So if AWS cost $10/year, would EBITDA be $10?

~~~
mbesto
Sort of.

EBITDA is Earnings _Before_ ITDA. Quick example, with super simple math:

Scenario A (AWS)

\- Over 5 years, you bring in $1M per year in revenue

\- Every year you pay $200k in AWS fees

\- Your earnings (Net Income) are $800k per year, your EBITDA is $800k per
year

Scenario B (Buy your own hardware)

\- Over 5 years, you bring in $1M per year in revenue

\- You pay $1M in year one for hardware and depreciate it over the next 10
years at $100k per year

\- Your earnings (Net Income) are $800k per year, your EBITDA is $900k per
year

There are a ton of nuances to this, but this is generally how it works. As you
can see the depreciation schedule affects this a lot, as well as when you
choose to make the investment. Hence why it's feasible that Dropbox took out
it's largest operating expense, i.e. AWS storage, which literally overnight
increased EBITDA. It just so happens to be that a year ago they switched over
to their own data center, and now they are touted "EBITDA profitable".

Long story - these stories are kinda stupid unless you get to see the full
income statement, balance sheet and cash flow statement.

------
polskibus
How come Dropbox wasn't eradicated by Microsoft's and Google's offerings that
are integrated with their product suites?

~~~
noam87
Dropbox is just one of the best examples out there of everything that makes a
software product solid: do one thing, do it well, don't bother the user, and
be profitable.

* It 100% "just works" on _all_ my devices (Mac, Linux, on a server, web, on my phone -- hell, I could stick it on a Raspberry Pi!).

* It integrates seamlessly with my filesystem.

* It has never, not once, failed me or bugged out on me. I've been using this product since it first came out and have not experienced even a minor bug!

* It's not tied to any other platform or service that might have conflicting interests.

* No fancy "smart" features or unexpected behaviour. All options are explicit and behave as expected.

* No fancy UX experiments, just straightforward to setup and use.

* I never have to think about it, it just does its job.

* It's a paid service that makes money (this in itself IS a feature).

It's just better than the competition. The peace of mind and get-out-of-the-
wayness is well worth the $10 bucks a month. One of the few products that
would be truly painful for me to lose...

~~~
ssharp
"Dropbox is just one of the best examples out there of everything that makes a
software product solid: do one thing, do it well, don't bother the user, and
be profitable."

I hate to be cynical here, but they're EBITDA profitable, not profitable, and
they've been in business for 10 years. I think there are thousands of better
examples but they might not be at the scale of Dropbox.

~~~
saosebastiao
EBITDA should really be renamed EBMS: Earnings Before Manipulative
Shenanigans. A high net profit might be heavily correlated with high EBITDA,
but it's relatively easy to show a GAAP profit while being in terrible
financial shape, and not so easy to do that with EBITDA.

In this case, I'd consider Dropbox's emergence into slight EBITDA profits as
not great, but a definitely welcome sigh of relief for a unicorn market full
of bullshit.

~~~
Naritai
How about SBBSNAMM? Stopped the Bleeding But Still Not Actually Making Money

------
unabst
I wrote this 448 days ago, on why I moved to Google Drive.
[https://news.ycombinator.com/item?id=11030171](https://news.ycombinator.com/item?id=11030171)

But now I'm back.

Google Drive is unusable. I upgraded to a paid plan so I'd have no storage
limits. But the moment I tried to back some large folders, I noticed the
upload speeds were capped, and the native client kept crashing. I'd leave it
on overnight, just to see it not running in the morning. 100 GB of files is a
trivial amount these days, and it's impossible to manage on Drive. And
selective sync would attempt to upload the folder before it deletes it
locally, so was useless. I couldn't just select which folders to upload first,
even though I was there trying it due to Drive's own inability to upload large
amounts of files.

Then there are all the sync issues. I had setup 5 or 6 computers to sync
files, which is the main use case Drive is sold on. Yet, I'd notice (1) and
(2) and (3) duplicate versions of the same file, and at one point I had a
folder with (79).

So I'd have to dig through partially synced folders and duplicates just to
figure out what to sync first, then sort through computers to see if Drive was
actually running. Then remove large folders to outside of Drive, and drop them
in in batches just so Drive wouldn't choke itself.

I also had an issue with file name length. I had copied a folder of saved web
pages from Dropbox. I'd noticed all the directories were empty in Drive. Turns
out, the folder names were too long. I understand the existence of technical
constraints, but if I can't move files from Dropbox just by copying them,
Drive needs to modify it's feature set.

Insync is the only reason I still have Drive. It doesn't crash, and it doesn't
have sync duplication issues. But again, there is some API rate limit that
causes it to halt. Drive is simply incapable of handling large amounts of
files. I wish they'd just say that.

So I am back on Dropbox because I have no other options. And it just works. I
had no idea syncing was such a hard problem.

And now with smart sync, I can see the files locally without having them take
up space. Most of the files are for storage purposes anyway, so this is
genius. The new online interface is better than google also.

It still locks up Photoshop, and I bet it's still piss slow in Japan, but for
now all my large folders are back on Dropbox. Drive is reserved for Sheets and
Docs that don't take up any space anyway, because the files are just links.

I use Windows but I don't trust Microsoft.

~~~
josefresco
Hey there - I went down a similar road as you about a year back when I looked
for a file backup solution.

I started with Dropbox, and attempted a sync of my local files. Within minutes
the Windows app crashed.

I switched to Google Drive, same thing. Synced a large number of files and the
Windows software crashed.

Even Tried Insync, still had crashing issues.

Researched the issue and found that both clients are limited in the amount of
RAM (32bit vs 64bit) and this limit is easily reached when syncing tens-of-
thousands of files causing the software to crash.

Neither provider offers a 64 bit version, or a version of their client
software that handles syncing jobs this large.

I finally settled on Backblaze which was affordable ($5/month), and "just
worked". The files aren't as accessible as Dropbox or Drive, but I still use
those for the files I need/touch often, and use Backblaze for my "entire PC"
cloud backup solution.

~~~
mcgrath_sh
I was sold on Backblaze. Until it would continually time out when backing up
my 5TB pseudo-server/HTPC. And then it would restart. Just as it reached 5TB.
I think I have finally found my solution with rclone (I moved to a Linux
system after Backblaze was a no-go) and Amazon Cloud Drive. All my data is
encrypted and it is trivially easy to add fresh backup copies. All of this is
mostly for my media. All non-media is in my dropbox account and I back up to a
physical drive. I used to be high on BackBlaze (I had issues with CrashPlan
taking forever too, BackBlaze was faster) but when it would continually just
have my backups magically disappear, I left.

~~~
glenneroo
I've been able to backup close to 1 million files (7.7TB) to CrashPlan,
granted I had to manually edit the .ini file multiple times to increase the
Java Heap memory allocation to allow that many files. At least the fix is
documented on their support page (although I still can't figure out why after
however many years this bug exists, they don't just add an option in the
software directly). The only problem I have with them is that they have an
upload limit, which changes from day to day, but over here in Europe I get
between 100-1000 KB/s, which according to support is throttled depending on
how many users are currently active. They offered to let me send them a hard-
drive... to their US address, haha! It took about 2 years of leaving my PC on
24/7 to finally back everything up, let's hope they don't go the same way as
StreamLoad (MediaMax), where I lost ~2TB of time-lapse footage due to being
unable to download everything before the service went offline. It's even
documented on Wikipedia
([https://en.wikipedia.org/wiki/The_Linkup](https://en.wikipedia.org/wiki/The_Linkup)).

p.s. I made this comparison of cloud image backup solutions back in 2012
([https://docs.google.com/spreadsheets/d/1mWx6wbL6NYbhjY1_ISNa...](https://docs.google.com/spreadsheets/d/1mWx6wbL6NYbhjY1_ISNapAgXbi-
JuKJJaF2K5RPAZLk/edit?usp=sharing)), it's crazy how many of these services are
now defunct.

~~~
mcgrath_sh
That is a really long time. I was able to back up most of my media in a little
over a week and a half...

~~~
glenneroo
Yeah it was painful. Thankfully ~50% of that time was at the office, where I
don't pay the electricity bill. A lot of the latter half was using a very
unreliable DSL connection, which, due to rotting copper cables (and multiple
chew-throughs from rats), I only get about half of the promised throughput, so
upstream is limited to ~120 KB/s at best. I finally caved in and bought an LTE
modem last year which gets me ~1 MB/s (on good days).

------
sunsu
I had no idea that Dropbox had topped $1B in annualized revenue. Their new
profitability gives me some measure of confidence that not all of the Unicorns
are facing inevitable doom.

~~~
JonFish85
"Their new profitability gives me some measure of confidence"

"Profitability" can mean whatever you want it to mean at a given moment. In
this particular case it's closer than a lot of measures, but it's still a non-
GAAP profit. In general these sort of startup announcements are marketing
materials.

Every company I've been at has declared themselves "profitable" \-- the devil
is in the details of what you choose to ignore.

~~~
sunsu
I agree and that's why I used the words "some measure of confidence". However,
it IS better than many other unicorn examples, such as Uber losing $800M in Q3
2016 for example.

------
roymurdock
> the company is now generating a profit excluding interest, taxes,
> depreciation and amortization (positive EBITDA)

EBITDA and cash flow are useful metrics to look at when evaluating whether or
not a company can service debt, but I'm wondering why they needed to open a
$600M credit line last month if they are gearing up for an IPO?

I guess they need a bit of extra cash on hand to pay off taxes as well as
interest on their last 2 loans (funding rounds) from JPMorgan?

~~~
pacaro
It's worth noting that they replaced an expiring $500million line of credit
that had not been touched. So you may be reading a little much into what may
just be prudent financial planning

~~~
roymurdock
Hadn't known about that, thx for the info, should have been included in the
article. New credit line makes sense then, not much to see here.

------
sulam
Drew's statement that Dropbox is the fastest SaaS company to $1B in annual
revenue is either wrong or basically tied. Salesforce.com did it in just over
9 years, and it has been almost 10 years since Dropbox was founded.

------
gist
Can't help but remember the quintessential (links anyone?) dropbox critique
when Drew first talked about it on HN. In particular something like 'why do we
need this when you can just use rsync'.

~~~
varenc
here it is:
[https://news.ycombinator.com/item?id=8863](https://news.ycombinator.com/item?id=8863)

my favorite comment is definitely this one:

    
    
      1. For a Linux user, you can already build such a system 
      yourself quite trivially by getting an FTP account, mounting 
      it locally with curlftpfs, and then using SVN or CVS on the 
      mounted filesystem. From Windows or Mac, this FTP account 
      could be accessed through built-in software.

~~~
j605
So you perform commits after uploading. How are you going to convince your
collaborators to do it too.

------
skolos
Looks like Dropbox starting popping up recently on the media. Looks like PR
push. Maybe preparing for IPO.

~~~
pdelbarba
I'm really starting to appreciate how cynical we've all become about how these
corporations operate. They've always "been evil", but now it's just assumed.

~~~
shimon
The company is overtly preparing for a big public sale of its shares. As part
of that it is conducting press outreach with the goal of talking up how well
it is performing.

Seems roughly comparable to a company that's about to launch, say, a new
electric car running a campaign to get people talking about how fun it is to
drive electric cars. Other than the clear effort to get coverage from
journalists, is there really something nefarious going on here?

~~~
sdflkd
Interacting with media / marketing seems to be considered evil on HN. Probably
because it's easy to abuse.

~~~
pdelbarba
It's probably just a case of too many of us having to deal with the day to day
struggles imposed by the friendly office marketing dept ;)

------
philipyoungg
Dropbox employees will be very pleased reading positive feedbacks from this
thread.

~~~
kerbalspacepro
I wonder how one feels when they receive this feedback, "I never think about
you until you fail, and you have failed me the least of your competitors. You
have succeeded in making me forget you. Good job. Here are 10 dollars."

------
chambo622
Surprised to see no talk of Paper on this thread. Sure, Dropbox has visibly
tried and failed to build other offerings - Carousel and Mailbox - but Paper
seems like the most well-reasoned attempt so far, and something a lot of their
customers probably need. It reminds me a lot of Quip which Salesforce thought
was worth $750M.

------
dorgo
I'm not a dropbox user. A friend send send me a link to dropbox folder with
fotos. The web-UI killed me. I could download the fotos one by one. It was not
smooth or fast or pleasant, but it was possible. But since it were hunderets
of fotos I looked for a big DOWNLOAD_ALL button. After some time I found such
button, but it told me that the folder is too big (2 or 3 GB) for download.
WHAT? I tried to create an account to download it to 'my' dropbox, but the
free space was less than 2 GB, as far as I rememebr. So dropbox asked me to
pay 10$ to get fotos from my friend. After cursing for an hour I asked my
friend to bring the fotos on a usb stick.

~~~
qznc
I have nearly pulled out of Dropbox by now. The fact that people send me
Dropbox links is it's only reason to stay. I find it very convenient to use as
a download manager.

My reason to drop it is that I want my data out of the US for privacy. Our
local (german) companies can provide the cloud basics by now.

~~~
lettergram
> My reason to drop it is that I want my data out of the US for privacy

Given most cloud providers use AWS as a back end, that's probably not
possible. Plus, if you send email, it likely will hit a gmail,hotmail,etc.
server. It's basically impossible to avoid.

~~~
qznc
I use web.de for email, which is the largest german mail provider in Germany.
Their data center is on the other side of my city. Unfortunately, they are
somewhat spammy even if you pay. I think about switching to mailbox.org or
posteo.de.

Sure, lots of my contacts use gmail, but since email encryption is not really
used, email is practically unsuitable for secure communication anyways.
Fortunately, we have a few good instant messengers (Signal, Wire, Threema,
...) now. The primary use for email today is authentication, so I should
probably get my own domain to maintain control.

My replacement for Dropbox is SyncThing. There is no cloud storage. It does
not provide sharing via public link of course.

~~~
jorvi
Why not use Protonmail? They even have an IMAP bridge these days..

~~~
qznc
Mailbox.org does E-Mail for over 20 years [0]. ProtonMail only exists for 3
years [1]. Thus, I give Mailbox.org a higher chance to be still around in 10
years.

ProtonMail does PGP via Javascript in the browser, which is ridiculed by
security people. Mailbox.org tried that in 2015 and it did not survive their
internal pentesting [2]. Maybe ProtonMail has better coders. Maybe not.

Mailbox.org smallest offer is 1€/month. ProtonMail lets you choose between
nothing and 5€/month. I like the mailbox.org price point.

If you believe in secure communication via email, you should support
ProtonMail. They try to make it hip and easy. In my opinion this is a lost
cause. Even if we could educate the masses about PGP, this is still behind the
Double Ratchet Algorithm [3].

[0] [https://mailbox.org/en/history/](https://mailbox.org/en/history/) [1]
[https://en.wikipedia.org/wiki/ProtonMail](https://en.wikipedia.org/wiki/ProtonMail)
[2]
[https://www.reddit.com/r/de/comments/3z0ymc/mailboxorg_oder_...](https://www.reddit.com/r/de/comments/3z0ymc/mailboxorg_oder_posteo/cyidcpf/)
(german) [3]
[https://en.wikipedia.org/wiki/Double_Ratchet_Algorithm](https://en.wikipedia.org/wiki/Double_Ratchet_Algorithm)

------
phamilton
> The measure does include compensation costs, such as stock or options issued
> to employees as part of their salary.

------
logicallee
For anyone curious, the key profit milestone is "any".

>Dropbox Inc.'s chief executive officer said the company is now generating a
profit excluding interest, taxes, depreciation and amortization.

~~~
MS_Buys_Upvotes
Yeah, I don't know why HN doesn't change this story to it's proper, correct
title.

Current title makes it look like Wall Street it saying it. The real title
makes it clear that the CEO is saying it, which, as a result, makes it useless
PR drivel.

~~~
grzm
HN doesn't change the title unless either the submitter or the mods are aware
that the title should be changed. You can contact the mods via the Contact
link in the footer. In my experience they're very responsive.

------
fencepost
Gah! Maybe it's just me and my lack of understanding of large corporate
financing, but my past job history means that just seeing "EBITDA" or having
it spelled out makes me twitch.

Probably because both companies where "positive EBITDA" was a relevant phrase
no longer exist.

------
mrtron
Amazing execution to get to $1B in annual revenue.

------
ksec
I really wish some Cloud Storage Provider would have online file management
solution. Currently I have many 2.5" HDD and USB stick, all with may be
slightly different / duplicated Data. I wish I could upload all of them to the
Cloud first and then start sorting it. Currently the only solution is to Buy a
super large HDD, copy every files on to it and start sorting it.

------
WillyOnWheels
[https://twitter.com/Pinboard/status/857662627496906752](https://twitter.com/Pinboard/status/857662627496906752)

"“EBITDA profitable”, n. Technical term used in accounting for companies
running at a loss"

~~~
mevile
Does the n stand for noun? Because that's not a noun is it. You can't point to
an EBITDA profitable. You can't put one in your pocket. Is an EBITDA
profitable dangerous? How about two? I have a million EBITDA profitables.

~~~
sanderjd
Agreed. Should be "adj." :)

------
kmfrk
For me, Dropbox is the iTunes of file synchronization; I have to use it, but
it's such a pain. It takes minutes to finish indexing on startup, and it
occasionally decides to take up all my CPU, which has forced me to disable it
on startup on Windows 10.

