Dropbox Completes New Secured Credit Agreement; Announces $1.2B Stock Repurchase Program

Rhea-AI Summary

Dropbox (DBX) has secured a new Credit and Guaranty Agreement providing up to $2.0 billion in secured term loans due 2029, led by Blackstone Credit & Insurance. The facility includes an initial $1.0 billion borrowing with access to an additional $1.0 billion. The company has also authorized a new $1.2 billion share repurchase program for its Class A common stock.

The company terminated its existing Revolving Credit Agreement from March 2014 and expects to meet or exceed its Q4 and FY 2024 financial guidance. The funds will be used for working capital, general corporate purposes, and share repurchases, with a focus on returning capital to shareholders and investing in new products like Dropbox Dash.

Positive

• Secured $2.0 billion term loan facility through 2029
• Authorization of $1.2 billion share repurchase program
• Company expects to meet or exceed Q4 and FY 2024 financial guidance

Negative

• Taking on substantial new debt with secured term loans
• Termination of existing revolving credit facility

Insights

Financial Analyst

This significant financial move demonstrates Dropbox's robust capital management strategy. The $2.0 billion secured term loan facility provides substantial financial flexibility, while the $1.2 billion share repurchase program signals strong confidence in the company's valuation. With a market cap of $8.7 billion, the buyback represents approximately 14% of shares outstanding - a meaningful reduction that should support stock price appreciation.

The delayed draw feature, starting with $1.0 billion and access to another $1.0 billion, offers strategic optionality. The company's positive guidance update for Q4 and FY 2024 suggests strong operational performance, making the timing of this debt raise opportune. The partnership with Blackstone Credit & Insurance adds credibility to the transaction and indicates favorable terms were likely secured.

Market Research Analyst

This dual announcement reflects Dropbox's evolution from a growth-focused tech company to a more mature business emphasizing shareholder returns. The substantial buyback program suggests management views the stock as undervalued, particularly given their optimistic outlook on meeting or exceeding guidance. The strategic focus on new products like Dropbox Dash, coupled with this financial engineering, indicates a balanced approach between growth investment and capital return.

The debt facility's structure provides significant dry powder for both organic growth initiatives and potential M&A opportunities, while the buyback should help improve key per-share metrics. The termination of the previous revolving credit agreement in favor of this new facility suggests more favorable terms and greater financial flexibility.

SAN FRANCISCO--(BUSINESS WIRE)-- Dropbox, Inc. (“Dropbox” or the “Company”) (Nasdaq: DBX), today announced entry into a Credit and Guaranty Agreement providing the Company with up to $2.0 billion in secured term loan due 2029 and a $1.2 billion stock repurchase program. The facility was led and substantially provided by Blackstone Credit & Insurance, who served as lead arranger and lead structuring agent, and proceeds may be used for working capital and general corporate purposes, including share repurchases.

The term loan facility includes a delayed draw feature with an initial borrowing of $1.0 billion and subsequent access to up to an additional $1.0 billion.

In connection with entry into the Credit Agreement, the Company terminated its existing Revolving Credit and Guaranty Agreement, dated as of March 20, 2014.

The Company also announced the authorization of a new share repurchase program for the purchase of an additional $1.2 billion of its Class A common stock.

Following this transaction, the Company announced that it expects to meet or exceed its Q4 and FY 2024 financial guidance as described in its investor supplement posted on November 7, 2024.

“As we near the end of 2024, we’re excited to announce the successful raise of up to $2 billion in secured term loans and the authorization of a new $1.2 billion share repurchase program,” said Dropbox Co-Founder and Chief Executive Officer Drew Houston. “This transaction facilitates our ongoing commitment to return capital to shareholders and further invest in our strategy to accelerate the growth of our new products, including Dropbox Dash, to create even more long-term value.”

About Dropbox

Dropbox is the one place to keep life organized and keep work moving. With more than 700 million registered users across approximately 180 countries, we're on a mission to design a more enlightened way of working. Dropbox is headquartered in San Francisco, CA, and has employees around the world. For more information on our mission and products, visit http:// dropbox.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, among other things, our expectations concerning use of proceeds, our future performance, including our expectations and guidance with respect to Q4 and full year 2024, our expectations regarding return of capital to shareholders, our future cash flows, our strategies, and our ability to create long-term value. Words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "plans," and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this press release and are subject to risks, uncertainties, and assumptions including, but not limited to: (i) our ability to retain and upgrade paying users, and increase our recurring revenue; (ii) our ability to attract new users or convert registered users to paying users; (iii) our expectations regarding general economic, political, and market trends and their respective impacts on our business; (iv) impacts to our financial results and business operations as a result of pricing and packaging changes to our subscription plans; (v) our future financial performance, including trends in revenue, costs of revenue, gross profit or gross margin, operating expenses, paying users, and free cash flow; (vi) our ability to achieve or maintain profitability; (vii) our liability or other potential legal, regulatory, or reputational consequences of any unauthorized access to our data or our users’ content, including through privacy and data security breaches; (viii) significant disruption of service on our platform or loss of content; (ix) any decline in demand for our platform or for content collaboration solutions in general; (x) changes in the interoperability of our platform across devices, operating systems, and third-party applications that we do not control; (xi) competition in our markets; (xii) our ability to respond to rapid technological changes, extend our platform, develop new features or products, or gain market acceptance for such new features or products; (xiii) our ability to improve quality and ease of adoption of our new and enhanced product experiences, features, and capabilities; (xiv) our ability to manage our growth or plan for future growth; (xv) our various acquisitions of businesses and the potential of such acquisitions to require significant management attention, disrupt our business, or dilute stockholder value; (xvi) our ability to attract, retain, integrate, and manage key and other highly qualified personnel, including as a result of our reduction in workforce announced in October 2024 or our Virtual First model with an increasingly distributed workforce; (xvii) our ability to realize the intended benefits of our workforce reduction announced in October 2024, (xviii) our capital allocation plans with respect to our stock repurchase program and other investments; and (xix) the dual class structure of our common stock and its effect of concentrating voting control with certain stockholders who held our capital stock prior to the completion of our initial public offering. Further information on risks that could affect Dropbox’s results is included in our filings with the Securities and Exchange Commission ("SEC"), including our Form 10-Q for the quarter ended September 30, 2024. Additional information will be made available in other reports that we may file with the SEC from time to time, which could cause actual results to vary from expectations. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Dropbox assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by applicable law.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241211041882/en/

Investors:

Peter Stabler

IR@dropbox.com

Media:

Maddy Pelton

press@dropbox.com

Source: Dropbox, Inc.

FAQ

How much is Dropbox's new share repurchase program worth?

Dropbox (DBX) has authorized a new share repurchase program worth $1.2 billion for its Class A common stock.

What is the total value and duration of Dropbox's new credit facility?

Dropbox has secured a $2.0 billion term loan facility that is due in 2029, with an initial $1.0 billion borrowing and access to an additional $1.0 billion.

Who is leading Dropbox's new credit agreement?

Blackstone Credit & Insurance is leading the credit agreement, serving as lead arranger and lead structuring agent.

What will Dropbox use the new credit facility funds for?

The funds will be used for working capital, general corporate purposes, share repurchases, and investing in new products like Dropbox Dash.

What is Dropbox's financial guidance outlook for Q4 and FY 2024?

Dropbox expects to meet or exceed its Q4 and FY 2024 financial guidance as previously described in its November 7, 2024 investor supplement.