Dropbox(US:DBX)2025-11-06 21:06Revenue Performance - Total revenue for Q3 2025 was $634.4 million, a decrease of 0.7% year-over-year; on a constant currency basis, revenue decreased by 1.2%[6] - Total annual recurring revenue (Total ARR) was $2.536 billion, down 1.7% year-over-year; on a constant currency basis, ARR decreased by 1.5%[6] - Paying users totaled 18.07 million, compared to 18.24 million in the same period last year; average revenue per paying user was $139.07[6] Profitability Metrics - GAAP operating margin improved to 27.5%, up from 20.0% year-over-year; Non-GAAP operating margin increased to 41.1% from 36.2%[6] - GAAP net income was $123.8 million, compared to $106.7 million for the same period last year; Non-GAAP net income was $196.7 million, up from $190.4 million[6] - The company reported a GAAP diluted net income per share of $0.47, compared to $0.34 in the same period last year; Non-GAAP diluted net income per share was $0.74, up from $0.60[6] Cash Flow and Liquidity - Net cash provided by operating activities was $302.1 million, an increase from $274.2 million year-over-year; free cash flow was $293.7 million, up from $270.1 million[6] - Cash, cash equivalents, and short-term investments totaled $925.3 million at the end of the quarter[6] - Cash, cash equivalents, and restricted cash at the end of the period were $764.2 million, a decrease from $1,360.5 million at the beginning of the period[16] - Net cash provided by operating activities for the nine months ended September 30, 2025, was $716.4 million, up from $680.3 million in the same period of 2024, reflecting a growth of about 5%[16] - Free cash flow for the three months ended September 30, 2025, was $293.7 million, up from $270.1 million in the same period of 2024, representing a growth of 8.5%[28] - Unlevered free cash flow for the nine months ended September 30, 2025, was $765.0 million, compared to $661.1 million for the same period in 2024, reflecting a growth of 15.7%[28] Expenses and Investments - Research and development expenses for the three months ended September 30, 2025, were $182.3 million, with a research and development margin of 28.7%[18] - Research and development expenses totaled $545.1 million, with a margin of 28.9%[22] - Sales and marketing expenses were $271.3 million, leading to a margin of 14.4%[22] - General and administrative expenses amounted to $170.2 million, with a margin of 9.0%[22] - The company incurred stock-based compensation expenses of $78.6 million for the three months ended September 30, 2025[16] - Capital expenditures for the three months ended September 30, 2025, were $8.4 million, up from $4.1 million in the same period of 2024[28] Balance Sheet and Assets - Total assets decreased from $3,325.2 million as of December 31, 2024, to $2,795.8 million as of September 30, 2025, representing a decline of approximately 16%[14] - Total current liabilities increased significantly from $1,210.8 million to $1,903.2 million, marking an increase of approximately 57%[14] - Total liabilities increased from $4,077.6 million to $4,327.0 million, indicating a rise of approximately 6%[14] Operational Efficiency - Operating margin for the three months ended September 30, 2025, was 27.5%, reflecting a significant increase in operational efficiency[18] - Income from operations for the nine months ended September 30, 2025, was $526.9 million, reflecting an operating margin of 28.0%[22] - The operating margin for the nine months ended September 30, 2025, was 41.4%[22] Strategic Initiatives - The company launched a self-serve version of Dash, providing access to an AI assistant and search engine for its 575,000 paying businesses[3] - The company is focused on sustainable growth and improving retention in its core business[3] - The company disclosed that it has provided non-GAAP financial measures to give investors additional insights into its performance, including revenue growth on a constant currency basis[29] - Management believes that free cash flow is an important indicator of liquidity and provides useful information regarding cash generated from operations[32] - Non-GAAP measures are used by management to evaluate financial performance and are reconciled to GAAP measures to mitigate limitations[33] Workforce and Restructuring - Total cash payments related to workforce reduction amounted to $13.2 million during the nine months ended September 30, 2025[28] - The company has made payments related to lease termination amounting to $36.0 million during the nine months ended September 30, 2025[28]