Dropbox Announces Fiscal 2025 First Quarter Results
Dropbox, Inc. (NASDAQ: DBX) today announced financial results for its first quarter ended March 31, 2025. “We’ve had a productive start to the year improving the Dash user experience and making t...
First Quarter Revenue of $624.7 Million, down 1.0% year-over-year; on a constant currency basis, down 0.6% year-over-year
GAAP Operating Margin of 29.4% and Non-GAAP Operating Margin of 41.7%
Net Cash Provided by Operating Activities of $153.8 Million and Free Cash Flow of $153.7 Million
SAN FRANCISCO: Dropbox, Inc. (NASDAQ: DBX) today announced financial results for its first quarter ended March 31, 2025.
“We’ve had a productive start to the year improving the Dash user experience and making targeted investments to simplify and strengthen our core FSS product,” said Dropbox Co-Founder and Chief Executive Officer Drew Houston. “More recently, our Spring launch introduced key new Dash features designed to solve specific pain points our customers face, including advanced video and image search and deeper integrations with essential apps. While the macro environment remains fluid, we’re focused on refining our execution and increasing our operating efficiency as we continue to capitalize on the Dash opportunity and create value for shareholders.”
First Quarter Fiscal 2025 Results
- Total revenue was $624.7 million, a decrease of 1.0% from the same period last year. On a constant currency basis, year-over-year revenue decreased by 0.6%.(1)
- Total ARR was $2.552 billion, a decrease of 0.2% from the same period last year. On a constant currency basis, ARR was flat.(2) Utilizing the exchange rates set at the beginning of 2025, total ARR decreased $18.8 million quarter-over-quarter.
- Paying users was 18.16 million, flat as compared to the same period last year. Average revenue per paying user was $139.26, as compared to $139.59 for the same period last year. Paying users decreased by 60,000 paying users quarter-over-quarter.
- GAAP gross margin was 81.3%, as compared to 83.2% for the same period last year. Non-GAAP gross margin was 82.9%, as compared to 84.6% for the same period last year as the Company continues to support its datacenter refresh cycle. Additionally, the Company saw a smaller depreciation benefit compared to the 2024 period from the change in useful lives from four to five years of certain infrastructure and component assets which was effective January 1, 2024.(3)
- GAAP operating margin was 29.4%, as compared to 22.7% for the same period last year. Non-GAAP operating margin was 41.7%, as compared to 36.5% for the same period last year. The increase in GAAP operating margin was partially due to a decrease in stock based compensation of 14%, from $78.0 million to $67.1 million.
- GAAP net income was $150.3 million, as compared to $132.3 million for the same period last year. Non-GAAP net income was $207.1 million, as compared to $196.7 million for the same period last year.
- Net cash provided by operating activities was $153.8 million, as compared to $175.5 million for the same period last year. Free cash flow was $153.7 million, as compared to $166.3 million for the same period last year. Cash flows in the first quarter of 2025 included a $36.0 million outflow for the third tranche termination fee related to the partial termination of the Company's lease for its San Francisco, California corporate headquarters and a $10.2 million outflow related to the 2024 reduction in workforce.
- GAAP diluted net income per share attributable to common stockholders was $0.51, as compared to $0.39 in the same period last year. Non-GAAP diluted net income per share attributable to common stockholders was $0.70, as compared to $0.58 in the same period last year.(4)
- Cash, cash equivalents and short-term investments ended at $1,180.0 million.
(1) | We calculate constant currency revenue growth rates by applying the prior period weighted average exchange rates to current period results. | |
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(2) | We calculate total annual recurring revenue ("Total ARR") as the number of users who have active paid licenses for access to our platform as of the end of the period, multiplied by their annualized subscription price to our platform. We adjust our exchange rates used to calculate Total ARR on an annual basis, at the beginning of each fiscal year. We calculate constant currency Total ARR growth rates by applying the current period exchange rate to prior period results. | |
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(3) | The impact from the change in our estimate was calculated based on assets that existed as of the effective date of the change and applying the revised estimated useful lives prospectively. | |
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(4) | GAAP and Non-GAAP diluted net income per share attributable to common stockholders is calculated based upon 295.7 million and 340.7 million diluted weighted-average shares of common stock for the three months ended March 31, 2025 and 2024, respectively. |
Financial Outlook
Dropbox will provide forward-looking guidance in connection with this quarterly earnings announcement on its conference call, webcast, and on its investor relations website at http://investors.dropbox.com.
Conference Call Information
Dropbox plans to host a conference call today to review its first quarter financial results and to discuss its financial outlook. This call is scheduled to begin at 2:00 p.m. PT / 5:00 p.m. ET and can be accessed by using the web link at http://investors.dropbox.com.
About Dropbox
Dropbox is the one place to keep life organized and keep work moving. With more than 700 million registered users across approximately 180 countries, we're on a mission to design a more enlightened way of working. Dropbox is headquartered in San Francisco, CA, and has employees around the world. For more information on our mission and products, visit http://dropbox.com.
Use of Non-GAAP Financial Measures
Reconciliations of non-GAAP financial measures to the most directly comparable financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled "About Non-GAAP Financial Measures."
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including, among other things, our expectations regarding distributed work and artificial intelligence and machine learning trends, related market opportunities and our ability to capitalize on those opportunities, as well as our ability to improve shareholder returns. Words such as "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect," "plans," and similar expressions are intended to identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition, and results of operations. These forward-looking statements speak only as of the date of this press release and are subject to risks, uncertainties, and assumptions including, but not limited to: (i) our ability to retain and upgrade paying users, and increase our recurring revenue; (ii) our ability to attract new users or convert registered users to paying users; (iii) our expectations regarding general economic, political, and market trends and their respective impacts on our business; (iv) impacts to our financial results and business operations as a result of pricing and packaging changes to our subscription plans; (v) our future financial performance, including trends in revenue, costs of revenue, gross profit or gross margin, operating expenses, paying users, and free cash flow; (vi) our ability to achieve or maintain profitability; (vii) our liability or other potential legal, regulatory, or reputational consequences of any unauthorized access to our data or our users’ content, including through privacy and data security breaches; (viii) significant disruption of service on our platform or loss of content; (ix) any decline in demand for our platform or for content collaboration solutions in general; (x) changes in the interoperability of our platform across devices, operating systems, and third-party applications that we do not control; (xi) competition in our markets; (xii) our ability to respond to rapid technological changes, extend our platform, develop new features or products, or gain market acceptance for such new features or products; (xiii) our ability to improve quality and ease of adoption of our new and enhanced product experiences, features, and capabilities; (xiv) our ability to manage our growth or plan for future growth; (xv) our various acquisitions of businesses and the potential of such acquisitions to require significant management attention, disrupt our business, or dilute stockholder value; (xvi) our ability to attract, retain, integrate, and manage key and other highly qualified personnel, including as a result of our reduction in workforce announced in October 2024 or our Virtual First model with an increasingly distributed workforce; (xvii) our ability to realize the intended benefits of our workforce reduction announced in October 2024, (xviii) our capital allocation plans with respect to our stock repurchase program and other investments; and (xix) the dual class structure of our common stock and its effect of concentrating voting control with certain stockholders who held our capital stock prior to the completion of our initial public offering. Further information on risks that could affect Dropbox’s results is included in our filings with the Securities and Exchange Commission ("SEC"), including our Form 10-K for the year ended December 31, 2024. Additional information will be made available in our quarterly report on Form 10-Q for the quarter ended March 31, 2025 and other reports that we may file with the SEC from time to time, which could cause actual results to vary from expectations. If the risks materialize or assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Dropbox assumes no obligation to, and does not currently intend to, update any such forward-looking statements after the date of this release, except as required by applicable law.
Dropbox, Inc. | ||||||||
Condensed Consolidated Statements of Operations | ||||||||
(In millions, except per share data) | ||||||||
(Unaudited) | ||||||||
|
|
| ||||||
|
| Three Months Ended | ||||||
|
| 2025 |
| 2024 | ||||
Revenue | $ | 624.7 |
|
| $ | 631.3 |
| |
Cost of revenue(1)(2) |
| 116.7 |
|
|
| 105.8 |
| |
Gross profit |
| 508.0 |
|
|
| 525.5 |
| |
Operating expenses: |
|
|
| |||||
Research and development(1)(2) |
| 178.4 |
|
|
| 219.1 |
| |
Sales and marketing(1)(2) |
| 92.0 |
|
|
| 108.8 |
| |
General and administrative(1)(2) |
| 53.8 |
|
|
| 54.1 |
| |
Total operating expenses |
| 324.2 |
|
|
| 382.0 |
| |
Income from operations |
| 183.8 |
|
|
| 143.5 |
| |
Interest (expense) income, net |
| (14.6 | ) |
|
| 7.3 |
| |
Other income, net |
| 0.3 |
|
|
| 0.3 |
| |
Income before income taxes |
| 169.5 |
|
|
| 151.1 |
| |
Provision for income taxes |
| (19.2 | ) |
|
| (18.8 | ) | |
Net income | $ | 150.3 |
|
| $ | 132.3 |
| |
Basic net income per share | $ | 0.52 |
|
| $ | 0.40 |
| |
Diluted net income per share | $ | 0.51 |
|
| $ | 0.39 |
| |
Weighted-average shares used in computing net income per share attributable to common stockholders, basic |
| 290.3 |
|
|
| 334.8 |
| |
Weighted-average shares used in computing net income per share attributable to common stockholders, diluted |
| 295.7 |
|
|
| 340.7 |
| |
(1) | Includes stock-based compensation expense as follows (in millions): |
| Three Months Ended | |||||||
| 2025 |
| 2024 | |||||
Cost of revenue | $ | 4.9 |
|
| $ | 5.2 |
| |
Research and development |
| 46.7 |
|
|
| 55.4 |
| |
Sales and marketing |
| 5.0 |
|
|
| 5.1 |
| |
General and administrative |
| 10.5 |
|
|
| 12.3 |
| |
Total stock-based compensation | $ | 67.1 |
|
| $ | 78.0 |
| |
(2) | Includes expenses related to our reduction in workforce such as severance, benefits and other related items during the quarter ended March 31, 2025. | |
Dropbox, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(In millions) | ||||||||
(Unaudited) | ||||||||
|
|
| ||||||
|
| As of | ||||||
|
| March 31, |
| December 31, | ||||
Assets |
|
|
| |||||
Current assets: |
|
|
| |||||
Cash and cash equivalents | $ | 942.2 |
|
| $ | 1,328.3 |
| |
Short-term investments |
| 237.8 |
|
|
| 265.9 |
| |
Trade and other receivables, net |
| 71.6 |
|
|
| 70.4 |
| |
Prepaid expenses and other current assets |
| 83.2 |
|
|
| 73.8 |
| |
Total current assets |
| 1,334.8 |
|
|
| 1,738.4 |
| |
Property and equipment, net |
| 364.6 |
|
|
| 358.8 |
| |
Operating lease right-of-use asset |
| 181.4 |
|
|
| 158.9 |
| |
Intangible assets, net |
| 48.8 |
|
|
| 54.9 |
| |
Goodwill |
| 442.6 |
|
|
| 442.8 |
| |
Deferred tax assets |
| 465.2 |
|
|
| 466.7 |
| |
Other assets |
| 119.9 |
|
|
| 104.7 |
| |
Total assets | $ | 2,957.3 |
|
| $ | 3,325.2 |
| |
Liabilities and stockholders' deficit |
|
|
| |||||
Current liabilities: |
|
|
| |||||
Accounts payable | $ | 33.6 |
|
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