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Andrew Houston, Chief Executive Officer of Dropbox, Inc. (NASDAQ:DBX), recently sold a substantial amount of the company's Class A Common Stock. According to a Form 4 filing with the Securities and Exchange Commission, Houston sold 504,580 shares over two days, January 2 and January 3, 2025, at prices ranging from $29.6536 to $30.00 per share. The total value of these transactions amounted to approximately $14.96 million. The sale comes as Dropbox, currently valued at $9.3 billion, shows strong financial health with an impressive 82% gross profit margin. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value metrics.
The sale was conducted under a pre-established Rule 10b5-1 trading plan, which allows insiders to set up a predetermined plan for selling stocks to avoid concerns about insider trading. This plan was adopted by Houston on December 5, 2023.
Houston, who also serves as a director and a ten percent owner of Dropbox, converted an equivalent number of Class B Common Stock into Class A Common Stock before the sale. These conversions were executed at a price of $0.00 per share, as per the reporting.
Following these transactions, Houston holds significant shares indirectly through trusts, with 444,444 shares held by The Erin Yu Houston Revocable Trust and 716,728 shares by the Houston Remainder Trust. Additionally, 8,266,666 shares are held as restricted stock awards, subject to vesting conditions.
In other recent news, Dropbox has announced a new share buyback program, authorizing an additional $1.2 billion in shares, which supplements the remaining $519 million from previous buybacks. The company also secured a $2 billion loan, primarily arranged by Blackstone (NYSE:BX) Credit & Insurance. Despite these developments, BofA Securities maintained an Underperform rating on Dropbox, expressing caution due to the uncertain pace of share repurchases and the company's ongoing business transition.
In recent financial results, Dropbox reported a slight year-over-year revenue increase of 0.9% to $639 million and a Non-GAAP net income of $190 million. The company also gained approximately 19,000 new paying users. For its Q4 revenue, Dropbox projected figures between $637 million and $640 million, with a full-year forecast of $2.542 billion to $2.545 billion.
Dropbox has also announced a significant workforce reduction of 20%, focusing more on its new AI-powered product, Dropbox Dash. However, due to severance costs from workforce reductions, the free cash flow expectations for 2024 have been lowered to $860 million to $875 million. Looking ahead, Dropbox expects its 2025 constant currency revenue to remain flat compared to 2024, with free cash flow projected at or above $950 million.
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