CNBC Unique: CNBC Transcript: Dropbox CEO Drew Houston Speaks with CNBCÃ¢â‚¬â„¢s Deirdre Bosa At this time
WHEN: At this time, Thursday, Could 9, 2019
WHERE: CNBCÃ¢â‚¬â„¢s Ã¢â‚¬Å“Closing BellÃ¢â‚¬Â
The next is the unofficial transcript of a CNBC EXCLUSIVE interview with Dropbox CEO Drew Houston and CNBCÃ¢â‚¬â„¢s Deirdre Bosa on CNBCÃ¢â‚¬â„¢s Ã¢â‚¬Å“Closing BellÃ¢â‚¬Â (M-F 3PM Ã¢â‚¬â€œ 5PM) in the present day, Thursday, Could ninth. The next is a hyperlink to video of the interview on CNBC.com:
Q1 hedge fund letters, convention, scoops and so on
Dropbox CEO Drew Houston breaks down the corporate’s earnings report
SARA EISEN: Shares of Dropbox buying and selling larger, up virtually 4% after hours, after an earnings beat. Our Deirdre Bosa is again now together with us and he or she brings a particular visitor, Dropbox CEO Drew Houston, to interrupt down the numbers. Deirdre, take it away.
DEIRDRE BOSA: Yeah, thanksÃ‚Â Sara. And Drew, thanks a lot for being with us in San Francisco this quarter. Now, youÃ¢â‚¬â„¢ve managed to beat expectations each quarter as a public firm, and also youÃ¢â‚¬â„¢ve improved some key metrics like paid customers. However your shares have underperformed the broader markets throughout that point because youÃ¢â‚¬â„¢ve been a public firm. So what’s it the markets are lacking or do you suppose that maybe they need you guys to maneuver sooner?
DREW HOUSTON: Nicely, weÃ¢â‚¬â„¢ve had an important first yr as a public firm, and each quarter assembly or exceeding our expectations and weÃ¢â‚¬â„¢ve had an important begin to this yr too. So weÃ¢â‚¬â„¢re actually pleased with our outcomes. And as I advised our group once we went public, our inventory value will fluctuate for some time and so a bit of little bit of volatility within the first yr is completely regular. WeÃ¢â‚¬â„¢ve had an important begin to this yr throughout the board. As you stated, rising income by 22% yr over yr, over 13 million paying customers now. So, weÃ¢â‚¬â„¢re actually enthusiastic about how weÃ¢â‚¬â„¢re doing.
DEIRDRE BOSA: Proper, it was one other good quarter however in fact weÃ¢â‚¬â„¢re ready to get that steerage on the decision. However I wish to discuss to you, keep on this form of the way youÃ¢â‚¬â„¢ve been as a public firm. Now, you guys went public with losses. How a lot did that matter in your roadshow or how a lot had been buyers questioning that? And why do you suppose that is such an enormous sticking level and such a significant level within the narrative for firms like Uber and Lyft? Are buyers extra targeted on it or is it as a result of your losses are simply a lot greater than something weÃ¢â‚¬â„¢ve seen earlier than?
DREW HOUSTON: Nicely, buyers actually appreciated the soundness and regular progress of our enterprise. And the truth that weÃ¢â‚¬â„¢ve been free money movement optimistic the previous few years is a giant promoting level for lots of them. And in order thatÃ¢â‚¬â„¢s been our focus as an organization and I feel thatÃ¢â‚¬â„¢s contributed to a number of the stability within the inventory. And you understand, itÃ¢â‚¬â„¢s arduous to say — the businesses which can be going public with larger progress however huge losses, it can simply be a special profile. WeÃ¢â‚¬â„¢ll see what occurs.
DIERDRE BOSA: Proper. Definitely a special enterprise mannequin. Now, Uber in fact, goes public tomorrow. We are able toÃ¢â‚¬â„¢t keep away from it. And I do know that you understand Travis Kalanick personally. We now know heÃ¢â‚¬â„¢s not going to be up right here on the balcony tomorrow ringing that bell, heÃ¢â‚¬â„¢s going to be down right here on the ground. As a founder your self, do you suppose that that is the precise determination? WhoÃ¢â‚¬â„¢s carried out extra to develop this firm, Dara or Travis?
DREW HOUSTON: Nicely, I feel — I wasnÃ¢â‚¬â„¢t near that call. I feel UberÃ¢â‚¬â„¢s an incredible firm. I feel they need to all be very happy with what theyÃ¢â‚¬â„¢ve constructed. I feel Travis needs to be very happy with beginning the corporate and main it to what itÃ¢â‚¬â„¢s grow to be after which DaraÃ¢â‚¬â„¢s additionally carried out an important job as CEO. I feel itÃ¢â‚¬â„¢s an important milestone. I feel they need to have a good time it.
WILFRED FROST: Drew, thanks for becoming a member of us. The 20% or so income progress, it was a bit of forward of expectations. A few of which, although, comes from ARPU progress, common income per consumer progress, which additionally barely beat expectations. What number of extra levers have you ever obtained to tug on that time so as to preserve the general prime line progress?
DREW HOUSTON: Nicely, two of the most important levers that we proceed to enhance are our subscriber growths after which the typical income for subscriber, or ARPU progress. And each are a spotlight of us — each are a spotlight for us. And the ARPU progress has been pushed by adoption of upper tier plans, whether or not thatÃ¢â‚¬â„¢s larger tier particular person plans or the enterprise model of Dropbox. As weÃ¢â‚¬â„¢ve added new performance to the product, for instance, this quarter we rolled out an integration with G-suite the place you’ll be able to have Google docs sheets inside Dropbox, issues like that drive engagement after which drive worth after which as folks see extra worth in Dropbox they purchase larger tier plans.
DEIRDRE BOSA: Hey, Drew, my final query for you, Slack is on the brink of go public and a few persons are drawing the comparability to you guys and Slack, the low gross sales and advertising and marketing prices, the phrase of mouth enterprise mannequin. So has being a public firm helped you guys develop additional into enterprise and do you suppose that will likely be a optimistic factor for Slack?
DREW HOUSTON: Yeah, completely. I imply, and Slack and Zoom are nice firms and examples of parents which have an analogous mannequin to us. So we — in our case folks begin utilizing Dropbox at dwelling or as a person. They carry it to work and begin utilizing it as a group. And adoption scales virally and organically, and which contributes to decrease gross sales and advertising and marketing prices and weÃ¢â‚¬â„¢re actually environment friendly in scaling the enterprise thatÃ¢â‚¬â„¢s been how weÃ¢â‚¬â„¢ve — thatÃ¢â‚¬â„¢s been a giant a part of how weÃ¢â‚¬â„¢ve carried out after which I feel Slack and Zoom — IÃ¢â‚¬â„¢m actually excited for slack. TheyÃ¢â‚¬â„¢ve constructed an important firm. And I feel will probably be enjoyable to see them within the public market.
DEIRDRE BOSA: Definitely, Drew. Thanks very a lot for being with us in the present day.
DREW HOUSTON: Thanks.