Dropbox(US:DBX)2026-02-19 23:02Financial 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]