Cloud storage company Dropbox Inc. may be wondering what it did wrong after seeing its stock fall today despite beating Wall Street’s targets with its third-quarter financial results.

The company, which sells cloud-based software that’s used by companies to sync and share files over the internet, reported a profit before certain costs such as stock compensation of 26 cents per share. Revenue came to $487.4 million, up 14% from the same quarter one year ago.

That was well ahead of Wall Street’s forecasts. Analysts had forecast Dropbox to report earnings of just 18 cents per share on revenue of $483.64 million. Nonetheless, despite an initial rise, Dropbox’s stock is down almost 5% after-hours.

Dropbox has seen strong demand for its services, which also help people to collaborate better while working from home, since the COVID-19 pandemic began. Indeed, the company said its customer count has grown considerably and that its paying user base now totals 15.25 million, up from 14 million in the same period last year.

Average revenue per paying user has also grown to $128.03, from $123.15 per user one year ago. Now, Dropbox says its total annual recurring revenue comes to $1.981 billion, up 12% from a year ago.

Dropbox also reported having $1.226 billion in cash, cash equivalents and short-term investments on its books.

Analyst Holger Mueller of Constellation Research Inc. told SiliconANGLE that the almost 15% revenue growth, coupled with disciplined cost management, has transformed Dropbox from a company that loses money to one that is now profitable.

“This is something Dropbox has been chasing for quite a while, so congratulations are in order,” Mueller said. “But Dropbox cannot rest, now it needs to innovate to shape digital work for the pandemic economy, so all eyes are on the its innovation pipeline.”

Drew Houston (pictured), chief executive at Dropbox, said the company’s results showed that the company’s business was building up strong momentum. “Our margin expansion demonstrates the strength of our business model and execution against our long-term targets,” he said. “We believe the opportunity to redesign work has never been bigger, and now, as a Virtual First company, we’ll truly live our mission as we build better products for distributed teams.”

Pund-IT Inc.’s Charles King told SiliconANGLE the after-hours selloff suggests that investors may have been expecting even more from the company. “I understand that point to a degree, but it seems to ignore the kinds of pressures that the company has faced in supporting corporate customers forced to make constant Covid-related and other adjustments,” King said.

Dropbox didn’t provide fourth-quarter guidance in its release, but Wall Street analysts have set a target of earnings of 20 cents per share on revenue of $494.09 million.

Image: Dropbox/Facebook