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Dropbox overhauls product line, welcomes Michelle Obama

Dropbox Inc. is jazzing up its product lineup for the second time in three months to give its sagging stock a jolt. An appearance by former First Lady Michelle Obama later in the day might be the additional buzz it’s looking for. Read More...

Dropbox Inc. is jazzing up its product lineup for the second time in three months to give its sagging stock a jolt. An appearance by former First Lady Michelle Obama later in the day might be the additional buzz it’s looking for.

On Wednesday it announced the evolution of its core product, Dropbox Spaces, so that various work folders are interlinked, and a new desktop app that functions as a digital hub where workers can collaborate with colleagues on projects that require access to digital files. Together, the products mark the latest metamorphosis of Dropbox DBX, -0.20% increasingly catering to businesses instead of consumers.

Dropbox Chief Executive Drew Houston, in a brief press conference following the announcement, said he was excited about the “new foundation” for enterprise customers and upgrading their content-sharing experience. He quickly added the “consumer is where we grew up,” and remains important.

The overhaul, on the heels of other new products unveiled in June, might also be the type of radical changes necessary at the unicorn, which was the darling of Wall Street when it went public in March 2018 only to see its stock tumble 30% since then.

The worst came in August, when shares nosedived, according to data from S&P Global Market Intelligence. Most of the decline occurred Aug. 9, the day after it reported weak billings that indicated slower growth, marring otherwise positive second-quarter results. Dropbox’s revenue rose 18% to $401.5 million on adjusted earnings of 10 cents per share. Analysts polled by FactSet had expected $401.1 million in revenue on earnings of 9 cents per share.

However, order billings and deferred revenue came in significantly below analyst expectations — troubling signs for near-term revenue growth. Dropbox has a consensus rating of “Overweight” from 15 FactSet analysts covering the stock, with a price target of $30.58 per share.

Dropbox shares dipped 0.2% to $19.79 in trading on Wednesday.

In June, Dropbox unveiled what was then the most significant overhaul of its software offerings, and a clear shot across the bow against rivals Microsoft Corp. MSFT, +1.44%  and Alphabet Inc.’s GOOGL, +2.27% GOOG, +2.28%  Google for workplace productivity sales.

Read more: Dropbox unveils workspace apps to take on Google, Microsoft

The San Francisco-based company hoped then, and still does, to bolster revenue through a revamped cloud computing tool kit that lets users seamlessly access a variety of file types such as spreadsheets, text documents, and slideshows in a number of popular cloud computing frameworks. The company hopes more of its customers pay for the upgraded services rather than stick with a free but more bare-bones service.

Houston said it was too early to share user adoption numbers for Dropbox’s new software lineup because it began rolling out in June.

But that was before its second-quarter earnings report.

This time around, Dropbox is banking that its latest products — and an hour-long conversation with Michelle Obama later this afternoon — will offset its recent stock slide. Splunk Inc. SPLK, -1.17%  employed a similar strategy last week when it announced new products and hosted former President Barack Obama in a fireside chat.

Read more: Obama weighs in on Big Data, privacy in Silicon Valley fireside chat

There is one major difference, however: President Obama’s talk was on the record. Michelle Obama’s talk late Wednesday on work-life balance is strictly off-the-record, with audio recordings and photos banned.

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