Core Insights - Dropbox (DBX) reported fourth-quarter 2025 non-GAAP earnings of 68 cents per share, exceeding the Zacks Consensus Estimate by 2.52% but down 6.8% year over year [1] - Revenues for the quarter were $636.2 million, a decline of 1.1% year over year, yet surpassing the consensus mark by 1.39% [1] - Total annual recurring revenues (ARR) were $2.53 billion, down 1.9% year over year [1] Financial Performance - Dropbox had 18.08 million paying users at the end of Q4 2025, a decrease from 18.22 million in the same quarter last year [3] - The average revenue per paying user was $139.68, slightly down from $140.06 year over year [3] - Non-GAAP gross margin for the quarter was 80.8%, a decrease of 230 basis points year over year [3] - Non-GAAP research and development expenses were $130.9 million, down 8.1% year over year [4] - Non-GAAP sales and marketing expenses decreased 13.2% year over year to $92.8 million [4] - Non-GAAP general and administrative expenses decreased 0.8% year over year to $47.6 million [4] - The company reported a non-GAAP operating margin of 38.2%, an increase of 130 basis points year over year [4] Balance Sheet & Cash Flow - As of December 31, 2025, Dropbox had cash, cash equivalents, and short-term investments totaling $1.04 billion, up from $925.3 million as of September 30 [5] - Cash generated by operating activities was $235.4 million in the reported quarter, down from $302.1 million in the previous quarter [5] - Free cash flow for the quarter was $224.9 million, compared to $293.7 million in the previous quarter [5] - The company repurchased 14 million shares for $415 million, with $1.17 billion remaining under existing share repurchase authorizations [6] Guidance - For Q1 2026, Dropbox expects revenues between $618 million and $621 million, with constant currency revenues anticipated between $610 million and $613 million [7] - The non-GAAP operating margin is expected to be 38% for Q1 2026 [7] - For the full year 2026, revenues are projected to be between $2.485 billion and $2.5 billion, with constant currency revenues expected between $2.458 billion and $2.473 billion [7] - The company anticipates a gross margin of 81.5-82% for the year and a non-GAAP operating margin of 39-39.5% [9] - Unlevered free cash flow is expected to be $1.04 billion or above, with capital expenditures between $20 million and $25 million [9]