Dropsuite reports annual revenue boost despite slowed website backup orders

Dropsuite ASX DSE annual revenue boost website backup orders slow
Dropsuite's annualised revenue run rate exceeded $4.6 million at the end of 2018, up around 40% from the previous year.

Global cloud software provider Dropsuite (ASX: DSE) has reported an annual recurring revenue of more than $4.6 million underpinned by a paid-user database of approximately 350,000.

The unaudited revenue reflects a 40% increase on results from the previous year, with more than 30% of the total figure comprised of earnings from the company’s email back-up and archiving product.

The product’s contribution to annual revenue was just 3% in January 2018 and has grown significantly due to a larger addressable market and “solid traction” in key geographies with Dropsuite’s top tier partners.

“Our product and engineering teams continue to enhance the [product’s] customer experience, feature-set and scalability,” the company said.

“We are witnessing a high-win partner ratio driven by a superior level of differentiation versus the competition.”

New revenue sources

Several business partnerships launched in late 2018 have started to book revenue, including a new North American partner company which added more than 5,000 paid users (representing a higher annual revenue per user) in the month to end December 2018.

Dropsuite said the rate of revenue growth has been “particularly encouraging”.

“It demonstrates that [we are] actively de-risking our revenue base so that our annual recurring revenue is made up of contributions from a wider spread of partners and products,” the company said.

“Our focus on securing larger small-to-medium enterprises through our partnership model is paying off… clients being serviced by our Managed Service Provider resellers are delivering lower risk, lower churn and higher annual revenue.”

Progressive migration

Dropsuite’s largest website backup partner has confirmed it will progressively migrate a large portion of its current user base away from Dropsuite’s website backup platform to its own inhouse platform.

The migration will take place over the next 12 months.

In April, the company reported slowed quarterly growth rate in total user numbers due to a drop in volume of new website backup orders from the same partner, and a retention of only high-end hosting packages and international business.

Dropsuite said it would compensate for the slowdown via an ongoing dialogue with its partner to “explore areas of further co-operation” regarding complementary product offerings.

“Such developments provide further impetus for [us] to continue diversifying our partner and user base… and we expect to comfortably absorb this migration,” it said.

Looking forward

Dropsuite chief executive officer Charif Elansari expects the latest revenue results will fuel the company’s continued global expansion, new partner wins and further product innovations.

“As [our] new partners ramp up their sales and marketing efforts, the short-term impacts to our annual recurring revenue will be much less evident,” he said.

“We have every confidence in our business model and we have a very deep global SME market opportunity which is indeed compelling and potentially highly lucrative.”

At midday, shares in Dropsuite were trading 30.77% higher at $0.034.

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