Dropsuite’s ARR Hits $49.8M, Paid Users Jump 42% in Q4 2024
Dropsuite Limited posted a standout quarter with a 37% rise in annual recurring revenue and a 42% jump in paid users, underscoring the strength of its partner ecosystem and product innovation.
- Annual Recurring Revenue (ARR) climbs to $49.8 million, up 37% year-on-year
- Paid user base expands 42% to 1.65 million seats
- Record quarterly seat additions of 165,000 driven by MSP channel growth
- Product gross margin remains strong at 70%, churn below 3%
- Cash reserves healthy at $28.6 million with no debt
Robust Growth in a Competitive Cloud Backup Market
Dropsuite Limited (ASX: DSE) has delivered a record-breaking quarter ending December 2024, showcasing the power of its partner-driven growth strategy and product innovation. The company reported a 37% increase in annual recurring revenue (ARR) to $49.8 million on a constant currency basis, alongside a 42% surge in paid users to 1.65 million. This performance highlights Dropsuite’s rising prominence in the cloud backup and archiving software sector.
Central to this growth has been the company’s expanding footprint within the Managed Service Provider (MSP) channel, which added 28 new direct and 169 indirect MSP partners in the quarter. These partnerships have fueled record seat additions of 165,000 in Q4 alone, contributing to over 480,000 new seats added in FY24. The company’s strategic focus on channel expansion and product enhancements appears to be resonating strongly with the market.
Sustaining Margins and Customer Loyalty
Despite the rapid user growth, Dropsuite maintained a healthy product gross margin of 70% and kept churn below 3%, signaling strong customer retention and satisfaction. The introduction of the Bring Your Own Storage (BYOS) product, which offers lower ARPU seats, has not diluted margins thanks to its cost-efficient channel model. Additionally, the PartnerServ migration service has been instrumental in converting users from competing backup vendors, further strengthening Dropsuite’s market position.
CEO Charif El Ansari emphasized the company’s dual commitment to innovation and customer support as key drivers behind the quarter’s success. He highlighted ongoing investments in product development, global sales expansion, and enhanced customer service capabilities as pillars for sustained growth.
Looking Ahead: Innovation and Market Expansion
Looking forward, Dropsuite is preparing to monetize its new backup product for Microsoft’s Entra ID, targeting over 100 MSP partners with expected revenue contributions starting late Q1 2025. The company plans to continue investing in research and development and go-to-market initiatives to maintain its growth momentum and profitability.
With $28.6 million in cash and no debt, Dropsuite is well positioned to pursue strategic M&A opportunities amid favorable market tailwinds in data protection. The company’s outlook remains optimistic as it leverages its partner ecosystem and product pipeline to drive profitable ARR growth.
Investors will be watching closely to see how Dropsuite balances aggressive expansion with maintaining operational discipline and customer satisfaction in a competitive landscape.
Bottom Line?
Dropsuite’s record quarter sets a strong foundation, but execution on new products and partner growth will be critical to sustaining momentum.
Questions in the middle?
- How will the new Entra ID backup product impact revenue and margins in 2025?
- What is the company’s strategy to manage churn as the user base scales?
- Are there specific M&A targets or sectors Dropsuite is eyeing to accelerate growth?
