Typically, businesses spend twice as much on S&M. Unlike other SaaS companies, Dropbox spends more of its revenue on engineering than sales and marketing. At an estimated sales efficiency of 1.1, Dropbox’s is among the highest of all publics among others stars like Shopify. This cash flow results directly from the sales efficiency of the business. In 2017, Dropbox generated more than $300M in free cash flow from ops, and for the past two years has sustained 30% cash flow from ops margins. The benefits of freemium at scale appear in the free cash flow from operations metrics. Most SaaS companies operate their businesses in this range. Net income margin has also approached public medians, now at -10%. Despite the enormous infrastructure overhead, Dropbox’s gross margin is rapidly approaching the public SaaS median of 71%. GM doubled over the same time frame, from 33% to 67%.

Gross margin has meaningfully improved over that time frame due to these efficiency gains.

This decrease is driven by user policy changes that affect users who have been inactive for a year or more, and a shift to operating their own data centers instead of using cloud providers. Images of Dropbox, which stores billions of files, hard disks and storage are the principal component of COGs. More impressive still: the company has managed to nearly double revenues while decreasing the amount they spent on COGs annually. 90% of revenue originates through self serve channels - an astounding figure for company that generated more than $1B in revenue last year.ĭropbox’s revenue grew from $604M to $1.1B from 2015 to 2017, a compound annual growth rate of 35%. 2% of those users convert to paid and pay an average of $9.33 per month. Dropbox has grown from 0 to 500 million users over that time period. Founded in 2007, Dropbox epitomizes the freemium go-to-market.

Dropbox annual pricing