Dropbox — Third Quarter 2026 Earnings Summary

Financial Performance:

• Total revenue was $637.3 million, an increase of 0.5% year-over-year; excluding FormSwift, revenue grew 1.0% year-over-year.
• Total Annual Recurring Revenue (ARR) was $2.555 billion, an increase of 0.8% year-over-year; excluding FormSwift, ARR grew 1.9%.
• GAAP operating margin was 27.5% (flat year-over-year); Non-GAAP operating margin was 42.2%, up from 41.1% in the prior year period.
• GAAP net income was $116.1 million, compared to $123.8 million in the prior year; Non-GAAP net income was $197.8 million, up from $196.7 million.
• GAAP diluted net income per share was $0.52, compared to $0.47; Non-GAAP diluted net income per share was $0.88, up from $0.74.
• Net cash provided by operating activities was $259.2 million, down from $302.1 million; Unlevered Free Cash Flow was $303.9 million, down from $314.2 million.
• GAAP gross margin was 80.6% (up from 79.8%); Non-GAAP gross margin was 81.8% (up from 81.4%).
• Paying users totaled 18.20 million, up from 18.07 million; Average revenue per paying user was $138.76, down from $139.07.
• Cash, cash equivalents, and short-term investments ended at $1.142 billion.

Business Segments and Product Lines:

• Dropbox introduced DBX Agent Cloud, a new infrastructure business for AI application developers, starting with S3-compatible object storage and expanding to include filesystem and content-processing capabilities.
• The company launched a new Dropbox experience allowing customers to find, understand, create, and edit content directly within the platform.
• The wind down of FormSwift was completed as of the end of the third quarter of 2026.

Other Key Points:

• Dropbox announced an agreement to acquire Tigris Data Inc., a globally distributed object storage platform, for approximately $350.0 million in cash, subject to customary purchase price adjustments and closing conditions.
• The Tigris Data acquisition is expected to close in the fourth quarter of 2026.
• During the quarter, the company repurchased common stock for $150.2 million; for the nine months ended September 30, 2026, total repurchases were $847.3 million.
• The company repaid $695.8 million in convertible senior notes during the nine months ended September 30, 2026.
• Management described the quarter as a "beat-and-raise" quarter, marking the fifth consecutive quarter of year-over-year revenue growth excluding FormSwift.
• The company plans to provide forward-looking guidance during a conference call scheduled for November 5, 2026.