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Things are looking up for the cloud storage company Dropbox Inc., which not only beat forecasts on first-quarter earnings and revenue but also persuaded its customers to pay more for its storage and other services, boosting its average revenue per user.

The company, which began life as a free cloud storage service but now offers a range of enterprise software services and competes with the likes of Amazon Web Services Inc., reported earnings before certain costs such as stock compensation of 10 cents per share. Revenue for the quarter came to $385.6 million, up 22% from a year ago.

Wall Street was expecting earnings of just 7 cents per share on revenue of $381.6 million.

Dropbox also revealed stronger-than-expected customer growth. The company said it now counts 13.2 million paying users, up from 11.5 million a year ago. Analysts were expecting 13 million paying users.

That number includes about 100,000 new users that migrated to Dropbox from the document management company HelloSign Inc., which was acquired in January for $230 million.

Better yet, Dropbox also managed to boost its average revenue per paying user to $121.04, up from $110.79 in the same period one year ago. That represents an increase of 5.9%, the company said. As a result, Dropbox shares rose more than 5% in the after-hours trading session. Update: Shares were up less than 1% Friday.

“We kicked off 2019 with a strong first quarter, driven by continued paying user growth and ARPU expansion,” said Dropbox co-founder and Chief Executive Officer Drew Houston (pictured). “Our 22% topline growth and robust operating margins reflect our efficient go-to-market strategy and operational discipline.”

Dropbox Chief Financial Officer Ajay Vashee added in a conference call with analysts that the ARPU expansion was driven primarily by new paying users opting for its premium professional and advanced plans.

Besides acquiring HelloSign, Dropbox also found time to expand on its partnership with Google LLC in the quarter just gone. In April, the company announced a key integration with Google’s G Suite designed to bring the best of both ecosystems together in a single interface. With the integration, workers can now launch G Suite’s Docs, Sheets and Slides applications directly in Dropbox to create new documents. They can also edit existing files originally created with other tools such as Microsoft Word.

Analyst Charles King of Pund-IT Inc. told SiliconANGLE that Dropbox’s performance indicates it’s managing to succeed in two key areas that often plague “as-a-service companies” that lead with free services. Namely, it’s growing its number of paying customers and getting those customers to spend more money, he said.

“Partly, that process is organic but it also depends on the company buying or building attractive new services to differentiate it from competitors,” King said. “Dropbox is doing a bit of both, buying e-signature start-up HelloSign in January. Plus, a few days ago, it launched a new cold storage service that was developed in-house.”

All in all, Dropbox executed well in the last quarter, demonstrating strong growth and a continued ability to extract more revenue from its existing users, said Holger Mueller, principal analyst and vice president of Constellation Research Inc.

“The key for Dropbox going forward is if it can find growth beyond its traditional [storage] business, and that’s where HelloSign comes into play,” Mueller said. “If Dropbox can add relevant revenue from its install base with e-signatures, that will be a huge win for its customers, Dropbox and likely investors too.”

More good news came with Dropbox’s guidance for the second quarter. The company is forecasting revenue in the range of $399 million to $401 million, slightly above analysts’ forecast of $399.4 million. Dropbox also raised its full-year revenue forecast to between $1.63 billion and $1.65 billion.

Photo: JD Lasica/Flickr