Financial Data and Key Metrics Changes - In Q4 2025, revenue was $636 million, a decline of 110 basis points year-over-year, but increased 40 basis points when excluding FormSwift, which was a 150 basis point headwind [23] - Total ARR was $2.526 billion, down 190 basis points year-over-year, and down 30 basis points when excluding FormSwift [24] - Average revenue per paying user (ARPU) increased to $139.68 from $139.07 in the prior quarter, primarily due to FX tailwinds and a shift from annual to monthly plans [24] - Gross margin was 80.8%, down 230 basis points year-over-year, while operating margin was 38.2%, up 130 basis points from the year-ago period [25][26] - Unlevered free cash flow was $251 million, or $0.99 per share, up 44% year-over-year [27] Business Line Data and Key Metrics Changes - The core FSS business showed steady growth across 2025, with improvements in funnel quality, pricing, and retention drivers [6] - The individuals business demonstrated growth, indicating that focused innovation can lead to better retention and growth [6] - The introduction of Dash capabilities within Teams plans has shown promising early engagement, with over half of active users returning multiple days per week [9] Market Data and Key Metrics Changes - The company exited Q4 with 18.08 million paying users, a sequential increase of approximately 10,000 users, driven by momentum in the simple plan [24] - The company expects modestly negative net new paying users in Q1 2026, largely due to seasonality and FormSwift headwinds, with flat growth anticipated for the remainder of the year [32] Company Strategy and Development Direction - The company aims to restore revenue growth while focusing on efficiency and improving the core business [4][15] - The strategy includes scaling Dash as a standalone product and integrating AI capabilities into the core FSS offering [10][19] - M&A is viewed as a potential growth lever, with a focus on strategic acquisitions that can expand the product portfolio and contribute to incremental ARR [19][82] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the direction of the company, emphasizing the importance of execution and scaling successful initiatives [13][22] - The leadership changes made in late 2024 and early 2025 are expected to drive sustained improvements in retention and growth [17][70] - The company acknowledges the competitive nature of the FSS market but believes there are opportunities for growth through innovation and improved customer experiences [15][17] Other Important Information - The company repurchased approximately 14 million shares in Q4, spending about $415 million, with $1.17 billion remaining under the share repurchase authorization [29] - The company executed subleases in its real estate portfolio, expecting to generate approximately $97 million in total future cash payments [28] Q&A Session Questions and Answers Question: Can you provide quantitative metrics around Dash? - The company is focused on product quality and engagement before scaling up adoption and monetization, with specific metrics to be shared in the future as progress is made [39][41] Question: What metrics can you provide around engagement with Dash? - Early results show good adoption and engagement from core users, with plans to accelerate the rollout of Dash to more users this year [51][52] Question: What drove improvements in retention? - Improvements in retention are attributed to new leadership and enhancements across the customer journey, including better communication of value and product experience [70][71] Question: What are the assumptions for paying user growth in the guidance? - The company expects some seasonality in Q1, with a flat year-over-year growth in net new paying users for the full year, reflecting improvements in retention and customer journey [79]

Financial Results & Investor Presentation Q4 2025 Safe Harbor Statement This presentation contains forward-looking statements. These statements may relate to, but are not limited to, plans for growth, technological capabilities and new features and products and the long-term financial targets of Dropbox, Inc. ("Dropbox," "we," "us," or similar terms), as well as assumptions relating to the foregoing. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predic ...

Financial Performance - Total revenue for Q4 2025 was $636.2 million, down 1.1% year-over-year; excluding FormSwift, revenue grew 0.4%[4] - Total annual recurring revenue (ARR) was $2.526 billion, a decrease of 1.9%; excluding FormSwift, ARR was $2.504 billion, a decrease of 0.3%[4] - Total revenue for fiscal 2025 was $2.521 billion, down 1.1%; excluding FormSwift, revenue grew 0.2%[7] - Revenue for Q4 2025 was $636.2 million, a decrease of 1.9% from $643.6 million in Q4 2024[13] - Gross profit for Q4 2025 was $504.1 million, down from $522.8 million in Q4 2024, representing a decline of 3.9%[13] - Gross profit for the period was $2,020.2 million, with a gross margin of 80.1%[23] - Gross profit margin for Q4 2025 was 82.5%, a slight increase of 0.9% from the previous year[25] - The company reported a net gain on real estate assets of $(1.3) million, with a margin of (0.1%) on these assets[23] Net Income and Margins - GAAP net income for Q4 2025 was $108.7 million, compared to $102.8 million; non-GAAP net income was $173.9 million, down from $222.6 million[4] - GAAP net income for fiscal 2025 was $508.4 million, compared to $452.3 million; non-GAAP net income was $775.4 million, down from $803.8 million[7] - Net income for Q4 2025 increased to $108.7 million, compared to $102.8 million in Q4 2024, reflecting a growth of 4.6%[13] - Basic net income per share for Q4 2025 was $0.43, up from $0.34 in Q4 2024, indicating a growth of 26.5%[13] - GAAP net income for Q4 2025 was $108.7 million, compared to $102.8 million in Q4 2024, representing a growth of 7.8%[27] - Non-GAAP net income for Q4 2025 was $173.9 million, down from $222.6 million in Q4 2024, indicating a decrease of 22%[27] Operating Expenses and Cash Flow - Net cash provided by operating activities was $235.4 million, compared to $213.8 million; unlevered free cash flow was $250.5 million, up from $210.5 million[4] - The company reported total operating expenses of $341.9 million for Q4 2025, down from $434.9 million in Q4 2024, a reduction of 21.4%[13] - Net cash provided by operating activities for the twelve months ended December 31, 2025, was $951.8 million, compared to $894.1 million in 2024, reflecting a year-over-year increase of 6.4%[17] - Free cash flow for Q4 2025 was $224.9 million, compared to $210.5 million in Q4 2024, reflecting an increase of 6.9%[28] - Unlevered free cash flow for Q4 2025 reached $250.5 million, up from $210.5 million in Q4 2024, marking a growth of 18.9%[28] User Metrics - Paying users totaled 18.08 million, down from 18.22 million; average revenue per paying user was $139.68, compared to $140.06[4] - Dropbox's user base grew to 18 million paid users, marking a 10% increase from the previous quarter[35] - The average revenue per user (ARPU) increased to $33, reflecting a 5% year-over-year growth[35] Research and Development - Research and development expenses for Q4 2025 were $186.9 million, a significant decrease of 23.1% compared to $243.0 million in Q4 2024[13] - Research and development expenses totaled $732.0 million, resulting in a research and development margin of 29.0%[23] - Research and development expenses for Q4 2025 totaled $914.9 million, down 19.5% from $1.2 billion in Q4 2024[25] Strategic Initiatives - The company plans to drive engagement and adoption of its product Dash and invest in future growth in 2026[3] - The company plans to wind down operations of FormSwift by the end of 2026, which is expected to impact future revenue growth[29] - Dropbox is investing $50 million in new product development, focusing on enhancing collaboration tools and cloud storage solutions[35] - Dropbox is exploring potential acquisitions to enhance its technology stack and expand its service offerings[35] Shareholder Actions - The company repurchased approximately 60.4 million shares for $1.7 billion during fiscal 2025[7] - Common stock repurchases for the twelve months ended December 31, 2025, totaled $1,713.9 million, up from $1,241.6 million in 2024, reflecting a significant increase in share buybacks[17] Balance Sheet Highlights - Total current assets decreased to $1,190.5 million as of December 31, 2025, down from $1,738.4 million as of December 31, 2024[15] - Total liabilities increased to $4,642.1 million as of December 31, 2025, compared to $4,077.6 million as of December 31, 2024[15] - The accumulated deficit grew to $(3,815.1) million as of December 31, 2025, from $(3,146.5) million as of December 31, 2024[15] - Total stockholders' deficit increased to $(1,797.2) million as of December 31, 2025, compared to $(752.4) million as of December 31, 2024[15]

Startup Battlefield nominations are now open!If you have a startup, are invested in one or know a great candidate who could take home the $100K grand prize and join the likes of Dropbox, Discord, CloudFlare and other alumni, we want to hear everything.Put in your nomination below and get one step closer to victory at Disrupt in October.https://t.co/UMGcwphAKg ...

Core Insights - IBM plans to triple entry-level hiring in the US by 2026 despite concerns that AI may reduce demand for early-career workers [1][5] - The hiring expansion will encompass various departments, although specific figures were not disclosed [2] - The company is adapting entry-level job descriptions to highlight the value that new hires can bring, focusing on roles that require human interaction rather than routine tasks that AI can perform [4] Hiring Strategy - IBM's chief human resources officer emphasized the need to demonstrate the real value of entry-level positions in light of AI advancements [4] - The roles for junior software developers have shifted from routine coding to more customer-facing responsibilities [4] - Entry-level HR staff are now tasked with managing situations where AI chatbots fall short, rather than handling all inquiries directly [4] Industry Context - Concerns are rising about AI potentially eliminating half of entry-level office jobs by 2030, creating anxiety among new graduates [5] - Some executives argue that investing in younger workers is beneficial during technological changes, as they tend to be more proficient with AI [7] - Dropbox is also expanding its internship and new graduate programs by 25% to leverage the AI skills of younger workers [8] Long-term Implications - Reducing early-career recruitment could lead to a shortage of mid-level managers in the future, increasing costs for companies that may need to hire externally [6] - Companies may face challenges in integrating externally hired talent into their culture compared to internally trained employees [6]

Startup Battlefield nominations are now open!If you have a startup, are invested in one or know a great candidate who could take home the $100K grand prize and join the likes of Dropbox, Discord, CloudFlare and other alumni, we want to hear everything.Put in your nomination below and get one step closer to victory at Disrupt in October.https://t.co/UMGcwphAKg ...

Company Performance - Dropbox closed at $24.41, down 2.28% from the previous trading session, underperforming the S&P 500's loss of 0.01% [1] - Prior to the recent trading day, Dropbox shares had declined 6.62%, compared to a 1.54% loss in the Computer and Technology sector and a 0.28% loss in the S&P 500 [1] Upcoming Earnings - Dropbox is set to report earnings on February 19, 2026, with an expected earnings per share (EPS) of $0.66, reflecting a year-over-year decline of 9.59% [2] - The Zacks Consensus Estimate for revenue is projected at $627.51 million, down 2.5% from the previous year [2] Fiscal Year Projections - For the entire fiscal year, the Zacks Consensus Estimates predict earnings of $2.82 per share and revenue of $2.51 billion, indicating a 13.25% increase in earnings but a 1.41% decrease in revenue compared to the prior year [3] Analyst Estimates and Stock Performance - Recent changes in analyst estimates for Dropbox suggest confidence in the company's business performance and profit potential [3] - The Zacks Rank system, which incorporates estimate changes, currently ranks Dropbox at 3 (Hold) [5] Valuation Metrics - Dropbox has a Forward P/E ratio of 8.16, which is lower than the industry average of 15.58 [6] - The company has a PEG ratio of 1.32, compared to the Internet - Services industry average PEG ratio of 1.8 [6] Industry Context - The Internet - Services industry, which includes Dropbox, has a Zacks Industry Rank of 159, placing it in the bottom 36% of over 250 industries [7] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [7]

Startup Battlefield nominations are now open!If you have a startup, are invested in one or know a great candidate who could take home the $100K grand prize and join the likes of Dropbox, Discord, CloudFlare and other alumni, we want to hear everything.Put in your nomination below and get one step closer to victory at Disrupt in October.https://t.co/UMGcwphAKg ...

Startup Battlefield nominations are now open!If you have a startup, are invested in one or know a great candidate who could take home the $100K grand prize and join the likes of Dropbox, Discord, CloudFlare and other alumni, we want to hear everything.Put in your nomination below and get one step closer to victory at Disrupt in October.https://t.co/UMGcwphAKg ...

Core Insights - The software sector in the US has experienced a significant downturn, with major companies like Microsoft and Oracle seeing substantial stock price declines, leading to a total market cap loss of $1 trillion [1][4] - The release of a new tool by AI startup Anthropic has heightened investor concerns about the potential disruption of the software industry by AI technologies, triggering a wave of selling and short-selling by hedge funds [1][2][5] Market Performance - As of February 5, multiple software stocks have seen declines exceeding 30% year-to-date, with Unity Software down 47.45%, Applovin down 44.31%, and Figma down 40.59% [2][3] - Major players like Microsoft and Oracle have also faced downward pressure, with declines of 18.6% and 29.79% respectively [3] Short-Selling Activity - Hedge funds have aggressively shorted software stocks, with TeraWulf and Asana experiencing the highest short-selling pressures, at over 35% and 25% of their tradable shares respectively [4] - Hedge funds have profited $24 billion from short-selling activities in the software sector amid the $1 trillion market cap loss [4] Industry Outlook - The software industry is expected to undergo significant differentiation, with only a few companies like Microsoft likely to successfully integrate AI and adapt to the ongoing technological shifts [5] - The transition from traditional SaaS platforms to AI-native platforms is seen as a major paradigm shift, with historical precedents indicating that such transformations occur approximately every 10 to 15 years [6] - The first wave of AI-native companies is anticipated to begin their IPO processes later this year, which may pose challenges for traditional software vendors [6]