Dropsuite (DSE) Q2 2024 TU earnings summary

Executive summary

• Achieved $39.9M ARR in Q2 FY24, up 8% QoQ and 31% YoY, with record paid user adds of 112,000, reaching 1.35M paid users.

• Gross margin remained stable at 69% QoQ and YoY; operating cashflow was $0.54M, up 37% QoQ and 60% YoY.

• Churn rate returned to below 3% after a temporary increase in the previous quarter.

• Launched new products, including Microsoft Entra ID Backup and a nonprofit SKU, and deepened integration with MSP partners.

• Cash on hand at $25.13M as of June 2024, with no debt.

Financial highlights

• Incremental ARR of $1.9M added in Q2; ARR reached $39.9M AUD, up 6% sequentially and 31% YoY.

• Operating cashflow for Q2 FY24 was $0.54M, up 37% sequentially and 60% YoY.

• Cash receipts totaled $9.33M, up 4% sequentially and 40% YoY.

• Gross margin held steady at 69%.

• ARPU at $2.47, up 4-5% YoY, but flat to slightly down sequentially due to product mix.

Outlook and guidance

• Expects continued ARR and user growth, with a focus on profitable expansion and incremental investment in R&D and go-to-market.

• No specific forward guidance provided; historically, the second half of the year has been stronger, but no guarantees were made.

• Pursuing high-conviction M&A opportunities amid strong data protection market tailwinds.

• Ongoing reinvestment in R&D, go-to-market, and customer success, with opportunistic cost increases as needed.