In November of last year, I rated shares of Dropbox ( DBX ) a ‘buy’ noting that the company’s valuation had come in while the company appeared poised to pivot toward growth via Dash and its self-serve offerings. Yet the Q4 resultsI'm an insurance Case Manager with a deep interest in investing. My investment philosophy is all about buying high quality stocks and great businesses. My favorite businesses are those led by disciplined capital allocators, earn exceptional returns on capital, and can compound thei ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2025 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from________to________ Commission File Number 001-38434 Dropbox, Inc. (Exact name of registrant as specified in its charter) Nevada 26-0138832 (State or other jurisdict ...

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]

In 2026, it wouldn't be an understatement to say that the software sector is undergoing a sea change as investors consider the impacts of AI on recurring revenue business models that were, as recently as last year, thought to be indestructible. Whether a "SaaSpocalypse" is comingWith combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the ...

Core Viewpoint - The software sector is experiencing significant changes due to the impact of AI on recurring revenue business models, which were previously considered robust [1]. Group 1 - The term "SaaSpocalypse" is being discussed as a potential outcome of these changes in the software industry [1]. - Gary Alexander has extensive experience in technology, having worked on Wall Street and in Silicon Valley, and advises seed-round startups [1]. - Alexander has been a contributor to Seeking Alpha since 2017 and has been featured in various web publications [1].

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in CAJPY over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. While ...

Tennenbaum said the company’s revenue outperformance versus guidance was driven “primarily by retention improvements across our self-serve SKUs.” Total ARR ended the quarter at $2.526 billion, down 190 basis points year-over-year. Excluding FormSwift, ARR was down 30 basis points year-over-year, with FormSwift representing a 160 basis point headwind to ARR.Chief Financial Officer Ross Tennenbaum, who joined Dropbox in December and delivered his first earnings call in the role, reported fourth-quarter revenu ...

分组1 - Dropbox reported quarterly earnings of $0.68 per share, exceeding the Zacks Consensus Estimate of $0.66 per share, but down from $0.73 per share a year ago, representing an earnings surprise of +2.52% [1] - The company achieved revenues of $636.2 million for the quarter ended December 2025, surpassing the Zacks Consensus Estimate by 1.39%, although this is a decrease from $643.6 million in the same quarter last year [2] - Over the last four quarters, Dropbox has consistently surpassed consensus EPS and revenue estimates [2] 分组2 - The stock has underperformed, losing about 11.2% since the beginning of the year, while the S&P 500 has gained 0.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.70 on revenues of $618.88 million, and for the current fiscal year, it is $3.06 on revenues of $2.5 billion [7] - The Zacks Industry Rank places the Internet - Services sector in the bottom 34% of over 250 Zacks industries, indicating potential challenges for stock performance [8]

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 the individual segment, indicating that focused innovation can drive better retention and growth [6][12] - The introduction of Dash capabilities within Teams plans has led to solid 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 by focusing on core business improvements and scaling Dash, with a goal of returning teams to positive net license growth [6][12] - The strategy includes simplifying pricing and packaging, enhancing onboarding experiences, and improving retention [7][10] - M&A is viewed as a strategic tool to expand the product portfolio and enhance customer relevance, with a focus on disciplined acquisitions [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 nature of the FSS market but believes that recent leadership changes and product innovations will drive sustained improvements in retention and growth [17][68] Other Important Information - The company generated over $1 billion of unlevered free cash flow in 2025 and reduced diluted share count by more than 50 million shares [4][5] - The company has a strong balance sheet with cash and short-term investments of $1.04 billion and plans to continue share repurchases [29] Q&A Session Questions and Answers Question: Can you provide quantitative metrics around Dash? - Management indicated that they are focused on product quality and engagement before monetization, 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 results from Dash, with good user engagement and plans to accelerate rollout to more users [50][51] Question: What drove improvements in retention? - Improvements were attributed to new leadership and enhancements across the customer journey, including better communication of value and product experience [68]

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]