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Shares of file-sharing company Dropbox Inc. went into free-fall late today, plummeting by almost 10 percent in extended trading after providing guidance that left shareholders sorely disappointed.

The stock drop comes despite what was a positive fourth quarter for the company, which posted earnings and revenue that beat Wall Street’s expectations.

For the fourth quarter, Dropbox reported earnings before certain costs such as stock compensation of 10 cents per share on revenue of $375.9 million, up 23 percent from the same period one year ago. The company’s net loss for the quarter came to $9.5 million, or 2 cents a share.

Wall Street was expecting Dropbox to report earnings of just 8 cents per share on revenue of $370 million.

“Our healthy top line growth and free cash flow generation reflect our strong business model, and our new product updates and integrations, like Dropbox Extensions, put Dropbox at the center of our users’ workflows and helped us close out the year with over 400,000 business teams,” Dropbox Chief Executive Drew Houston (pictured) said in prepared remarks.

But the solid performance in the quarter was undone by discouraging guidance for the next quarter and full year. The company said it’s expecting first-quarter sales of $379 million to $382 million and full-year sales of $1.63 billion to $1.64 billion. Wall Street said it was hoping for quarterly sales of $378 million and full-year revenue of $1.6 billion.

The guidance was more or less in line with Wall Street’s forecast, but Dropbox shareholders were clearly hoping for something more impressive, hence the dramatic selloff in after-hours trading. Update: Shares fell Friday 8.4 percent, to $23.45 a share.

Pat Walravens, an analyst with JMP Securities, told MarketWatch that the selloff may have had something to do with Dropbox’s margin guidance for the next year.

In a conference call, Dropbox Chief Financial Officer Ajay Vashee said the company would face overlapping rent expenses in the next year in its new headquarters and its existing offices in San Francisco. Vashee added that the company expects to return to operating margin expansion by the end of the year.

Dropbox offers a cloud-based file sharing application that boasts more than 500 million registered users. The company faces tough competition in this niche however, with the likes of Apple Inc., Box Inc., Google LLC and Microsoft Corp. all seen as rivals.

The company is still growing faster than expected despite the intense competition, however. In the last quarter, it added around 400,000 new paying customers, bringing its total subscription count to 12.7 million by the end of December. That was well ahead of analysts’ forecast of 12.54 million subscribers, CNBC reported.

Elsewhere, Dropbox’s average revenue per paying user came to $119.61, up from $113.39 a year ago. Gross margins were 74.9 percent, up from 70 percent a year ago. Dropbox also reported deferred revenue of $495 million, which came in just below the $498 million estimate.

For the full year 2018, Dropbox posted earnings before certain costs such as stock compensation of 41 cents per share. Its net loss came to $484.9 million on revenue of $1.39 billion.

The company was fairly busy during the last three months, partnering with a video calling software firm called Zoom in order to offer more remote collaboration tools to its users. Dropbox also made the biggest acquisition in its history, buying a document management company called HelloSign Inc. for $230 million. It was said at the time that Dropbox was planning to integrate features such as HelloSign’s electronic signature service into its own offerings.

Dropbox’s fickle investors may not be feeling the love, but the company performed well throughout 2018, narrowing its net losses down to just a few percent, Holger Mueller, an analyst with Constellation Research Inc., told SiliconANGLE.

“New capabilities and more share of the wallet will be key for Dropbox in 2019, and additional services like the ones from freshly acquired Hellosign should help,” Mueller said. “The need for enterprises to automate document storage and workflow is key to enabling their next-generation applications.”

Photo: JD Lasica/Flickr