Dropbox (DBX) Q4 2025 earnings summary

Executive summary

• Q4 2025 revenue exceeded guidance, with constant currency revenue flat year-over-year excluding FormSwift wind down, reflecting stabilization in the core business and improved efficiency.

• Over $1 billion in unlevered free cash flow was generated, and diluted share count was reduced by more than 50 million through share repurchases in 2025.

• Leadership changes and renewed focus on product, pricing, and retention drove steady growth in the individuals business and set the stage for team license growth in 2026.

• Dash, an AI-powered layer integrated into Dropbox, showed strong early engagement and is being scaled to more users, with monetization focus planned for the second half of 2026.

• Protect and Control, a security-focused product, closed a six-figure international deal and is positioned as a key enabler for AI adoption and data security.

Financial highlights

• Q4 2025 revenue was $636 million, down 1.1% year-over-year, but up 0.4% excluding FormSwift; constant currency revenue was $633 million, flat excluding FormSwift.

• Total ARR was $2.526 billion, down 1.9% year-over-year; excluding FormSwift, ARR was down 0.3%.

• Gross margin was 80.8%, down 230 bps year-over-year due to higher depreciation and infrastructure costs.

• Operating margin was 38.2%, up 130 bps year-over-year and above guidance.

• Net income for Q4 was $174 million; diluted EPS was $0.68, down from $0.73 a year ago due to higher interest expense.

• Unlevered free cash flow was $251 million in Q4, up 44% year-over-year; cash flow from operations was $235 million, up 10%.

• Ended Q4 with $1.04 billion in cash and short-term investments.

Outlook and guidance

• Q1 2026 revenue expected at $618–$621 million; excluding FormSwift, this is 0.4% growth year-over-year at midpoint.

• Full year 2026 revenue guidance is $2.485–$2.5 billion; flat year-over-year excluding FormSwift.

• Gross margin expected at 81.5%–82%; non-GAAP operating margin at 39%–39.5%.

• Unlevered free cash flow expected at or above $1.04 billion; CapEx $20–$25 million, with finance leases at ~4% of revenue.

• Diluted weighted average shares outstanding expected to decrease to 227–232 million, assuming full share repurchase authorization is used.

• Modestly negative net new paying users expected in Q1 2026 due to seasonality and FormSwift, with flat paying user growth for the remainder of the year.