Dropbox (NasdaqGS:DBX) Q4 2025 Earnings call February 19, 2026 05:00 PM ET Company ParticipantsDrew Houston - CEO and Co-FounderMatt Bullock - Equity Research AssociatePeter Stabler - Head of Investor RelationsRishi Jaluria - Managing Director of Software Equity ResearchRoss Tennenbaum - CFOConference Call ParticipantsGeorge Kurosawa - Equity Research AnalystJaiden Patel - Equity Research AnalystOperatorThank you for standing by, and welcome to the Dropbox fourth quarter 2025 earnings conference call. At th ...

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 [22] - Total ARR was $2.526 billion, down 190 basis points year-over-year, and down 30 basis points when excluding FormSwift [23] - 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 [23][24] - Gross margin was 80.8%, down 230 basis points year-over-year, while operating margin was 38.2%, exceeding guidance of 37% [24][25] Business Line Data and Key Metrics Changes - The core FSS business showed steady growth in 2025, with improvements in funnel quality, pricing, and retention drivers [6][17] - 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 [8] 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 [23] - 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 [12][16] - 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 [12][22] - The company acknowledges the competitive landscape of the FSS market but believes that recent leadership changes and product innovations will drive sustained improvements in retention and growth [17][68] - The outlook for 2026 includes expectations for flat revenue growth, with continued investments in product development and customer engagement [32][33] 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 has 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? - Management indicated that the focus is currently on product quality and engagement, with specific metrics to be shared as adoption scales [38][39] Question: What metrics can you provide around engagement with Dash? - Management noted strong early engagement from users, with good results from initial trials, and plans to accelerate the rollout of Dash [51] Question: What drove improvements in retention? - Improvements were attributed to new leadership and initiatives aimed at enhancing the customer journey and product experience [68]

Dropbox (NasdaqGS:DBX) Q4 2025 Earnings call February 19, 2026 05:00 PM ET Speaker4Thank you for standing by, and welcome to the Dropbox fourth quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star ...