Cloud storage company Dropbox Inc.’s stock rose more than 3% late today after it reported first-quarter financial results that beat expectations.

The company said its performance was boosted by an increase in users and engagement since the onset of the COVID-19 pandemic.

The provider of file-sharing services reported a profit before certain costs such as stock compensation of 17 cents per share on revenue of $455 million. That was well ahead of Wall Street’s forecast of a 14-cent profit on revenue of $451.9 million.

Dropbox also reported $39.3 million in net income, marking the first time it has ever shown a quarterly profit.

It said it now counts more than 14.6 million paying users, up from 13.2 million in the same period a year ago. Average revenue per paying user rose to $126.30, from $121.04 per user in the first quarter of last year.

The company added that its annual recurring revenue, a common measure for cloud software firms, rose 16%, to $1.864 billion.

“We had a strong first quarter as we rallied together to support our customers and our community during this unprecedented public health crisis,” Dropbox Chief Executive Drew Houston (pictured) said in a statement that emphasized the company’s products that “help facilitate distributed work at scale.”

Dropbox’s guidance for the second quarter was light, with executives forecasting revenue of $463 million to $466 million, below Wall Street’s estimate of $476.1 million.

However, Dropbox Chief Financial Officer Ajay Vashee stirred things up in a conference call with analysts, saying he expects the company to show a profit for the full year as well. The company now sees $1.88 billion to $1.9 billion in full year revenue, just ahead of analysts’ estimates of $1.88 billion. Dropbox had previously said in February that its goal was to become profitable by the end of the year.

Dropbox said it has seen a significant increase in demand for its services since mid-March, when the coronavirus pandemic began escalating. This is becoming a common trend among collaboration software providers, which are benefiting as millions of people work from home and use their platforms to stay connected. The company said it expects to benefit from this even as lockdowns start to ease across the world.

“Certainly, a huge percentage of the world is being forced into a remote work state for the first time, but I think the effects of it will persist well beyond when we typically go back into the office,” Houston said during the conference call.

Analyst Charles King of Pund-IT Inc. told SiliconANGLE that Dropbox’s disciplined leadership and evolving product portfolio meant that it was really only a matter of time before it became profitable. But he said its progress has accelerated thanks to an alignment of skills and good fortune that most businesses can only dream of.

“Rather than pursuing the market opportunities that conventional wisdom says it should, the COVID-19 crisis and the shift to working-from-home methodologies means that instead, the market is pursuing Dropbox and other companies that can reliably support those solutions and workloads,” King said. “Given the shape of the pandemic and surveys that suggest that a substantial percentage of companies will continue supporting work-from-home policies after the pandemic recedes, Dropbox’s optimistic outlook seems entirely reasonable.”

Constellation Research Inc. analyst Holger Mueller said agreed, saying he wasn’t surprised to see Dropbox doing so well as the Covid-19 pandemic is accelerating the digitization efforts of most enterprises.

“It’s good to see the vendor grow, and more importantly become profitable, a key metric in times of survival for many enterprises,” Mueller said. “Kudos to the executive team for also offering full year guidance. Now it needs to deliver.”

The company said it saw a record number of individuals and teams try out its services in the first quarter. It has also seen higher levels of engagement and collaboration within its software suite. For example, daily Dropbox Business team trials have increased by 40% since March, while individual plan trials have risen by 25%.

Photo: Christophe Pelletier/Flickr