Insider trading can give investors a more complete view of activity within the world’s publicly-listed companies. No one has more knowledge of a company, and its prospects, than its executives and directors.
In this report, we are going to highlight some interesting insider buying at Dropbox Inc (DBX:US). Dropbox is a technology company that offers a range of productivity tools. Its platform enables users to bring files and cloud content together in one place. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $11.6 billion.
Dropbox Inc: Insider Buying
Our records show that on 10 March, Annox Capital Management – a venture capital firm represented on Dropbox’s board – purchased 100,000 DBX shares at a price of $24.59 per share. This purchase cost the firm a total of $2.5 million.
This trade stands out for a couple of reasons. Firstly, insider purchases at Dropbox are quite rare. The only other purchase in the last two years was a purchase by Co-Founder and CEO Drew Houston in late 2019. This recent purchase – which has increased the size of Annox’s holding by 82% – suggests that the VC firm is quite confident the stock is set to rise.
Secondly, Bob Mylod, the Managing Partner at Annox, who sits on the board at Dropbox, is an expert in finance, M&A and international growth. Before founding Annox in 2013, he was a Principal at Stonington Partners, a private equity investment firm. Companies that Annox has backed in the past include Affirm, Booking Holdings, and Lemonade.
Dropbox’s recent fourth-quarter and full-year results showed that the company is benefiting from the shift towards working remotely.
For the fourth quarter, total revenue was $504.1 million, an increase of 13% from the same period last year while total annual recurring revenue (ARR) was up 11% and surpassed $2.0 billion. Meanwhile, Non-GAAP net income came in at $117.9 million, versus $67.4 million in the same period in 2019.
At the end of the period, the company had 15.48 million paying users, up from 14.31 million at the end of 2019. Average revenue per paying user was $130.17, up from $125.00 for the same period in 2019.
“2020 was a transformational year for Dropbox” said Dropbox Co-founder and Chief Executive Officer Drew Houston. “We ended the year with strong margin expansion, free cash flow, and more than $2B in ARR as we continued to make progress toward our long-term financial targets. Going into 2021, we’re focused on executing against our strategy and building essential products for the new era of distributed work,” he added.
In light of these results, we see the insider buying here as a bullish signal.