Dropbox takes $400 million charge on real estate as it goes virtual

Drew Houston, Dropbox Co-Founder and CEO, speaking at CNBC’s @Perform conference in San Francisco on November 4, 2019.

Arun Nevader | CNBC

Dropbox on Thursday noted a $398.two million one particular-time cost in the fourth quarter to replicate the firm’s shift to remote do the job.

As the coronavirus emerged in the U.S. very last yr, companies shut offices and pushed their staff members to do the job from their houses. Some companies noticed that the remote do the job did not damage — and in some cases aided — productivity and worker pleasure, and sought to make it more everlasting. That can arrive at a price for companies with sizeable true-estate footprints.

Dropbox, which would make cloud-based storage and productivity computer software and is known for its lavish business office house in San Francisco’s South of Market community, announced its “digital initial” remote-do the job program in Oct.

“Distant do the job (outside an business office) will be the principal working experience for all staff members and the day-to-day default for unique do the job,” Dropbox stated in a website article. Some business office house will remain for collaboration, and Dropbox will sublease some of the house.

In the initial, 2nd and third quarters of 2020, Dropbox noted internet earnings immediately after several years of dropping income. The impairment cost from “right-of-use and other lease similar property” that Dropbox disclosed in its fourth-quarter earnings assertion reverses that streak, ensuing in a nearly $346 million loss for the organization, in contrast with a $33 million revenue in the third quarter.

The cost was excluded from non-GAAP success, which reflected 28 cents in earnings for each share, up from sixteen cents in the yr-in the past quarter, and exceeded the consensus of 24 cents for each share predicted by analysts polled by Refinitiv. Dropbox shares were down one% in prolonged trading.

Ahead of Dropbox dedicated to possessing its men and women do the job remotely, technological innovation companies like Atlassian, Twitter and Zillow experienced stated they would let staff members to go on operating from household even immediately after the pandemic subsides. Earlier this month, San Francisco’s biggest employer, Salesforce, stated that most of its staff members will be in offices one particular to 3 days for each 7 days once it is safe and sound plenty of to return.

In Oct, immediately after countless numbers of its staff members experienced gotten utilized to operating devoid of staying upcoming to their colleagues, Pinterest stated it experienced agreed to pay $89.5 million to stop a lease for 490,000 square ft of business office house near its San Francisco headquarters. That way, it would not have to pay at minimum $440 million in rent.

Look at: Dropbox CEO on ‘virtual first’ initiative for staff members to do the job-from-household