Dropbox: Fiscal 1Q26 Financial Results

Summary:

• First quarter GAAP operating margin of 27.5% and non-GAAP operating margin of 40.1%
• Net cash provided by operating activities of $204.5 million and unlevered free cash flow of $236.4 million
• Revenue of $629.5 million, an increase of 0.8% YoY; excluding FormSwift, up 2.0% YoY

Dropbox, Inc. announced financial results for its first quarter ended March 31, 2026.“We delivered a strong quarter, exceeding the high end of our guidance for revenue and operating margin, with revenue growing 0.8% year-over-year and 2% year-over-year excluding FormSwift,” said Drew Houston, co-founder and CEO, Dropbox. “This represents another quarter of positive revenue growth excluding FormSwift and reflects progress in strengthening our core business. We’re seeing encouraging signs from the focused work we’ve done to improve retention in Individuals, alongside funnel and product improvements in Teams. We’re also continuing to expand Dash in Dropbox thoughtfully across our existing user base as we invest with discipline in the platform capabilities that will support future growth.”

First Quarter 2026 Results Compared to First Quarter 2025

• Total revenue was $629.5 million, an increase of 0.8%. Excluding FormSwift, which we significantly reduced our investment in at the beginning of 2025 and plan to wind down operations by the end of 2026, revenue grew 2.0%. On a constant currency basis, total revenue excluding FormSwift increased by 0.4%⁽¹⁾
• Total ARR was $2.560 billion, an increase of 0.3%. Excluding FormSwift, Total ARR was $2.540 billion, an increase of 1.3%. On a constant currency basis, Total ARR excluding FormSwift decreased 0.1%. Total ARR on a constant currency basis decreased $2.8 million quarter-over-quarter; excluding FormSwift, it decreased $0.8 million⁽²⁾
• Paying users totaled 18.09 million, as compared to 18.16 million. Average revenue per paying user was $141.18, as compared to $139.26
• GAAP gross margin was 79.7%, as compared to 81.3%. Non-GAAP gross margin was 81.1%, as compared to 82.9%
• GAAP operating margin was 27.5%, as compared to 29.4%. Non-GAAP operating margin was 40.1%, as compared to 41.7%
• GAAP net income was $114.5 million, as compared to $150.3 million. Non-GAAP net income was $180.4 million, as compared to $207.1 million. The decrease was primarily due to an increase in interest expense related to additional draws on our term loan facility
• Net cash provided by operating activities was $204.5 million, as compared to $153.8 million. Unlevered free cash flow was $236.4 million, as compared to $174.4 million. 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 $0.48, as compared to $0.51. Non-GAAP diluted net income per share attributable to common stockholders was $0.76, as compared to $0.70⁽³⁾
• Cash, cash equivalents and short-term investments ended at $1.289 billion

⁽¹⁾ We calculate constant currency revenue growth rates by applying the prior period weighted average exchange rates to current period results
⁽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
⁽³⁾ GAAP and Non-GAAP diluted net income per share attributable to common stockholders is calculated based upon 236.7 million and 295.7 million diluted weighted-average shares of common stock for the three months ended March 31, 2026 and 2025, respectively