Dropbox reported financial results for the fourth quarter and fiscal year ended December 31, 2025.

Dropbox, Inc. (NASDAQ: DBX), today announced financial results for its fourth quarter and fiscal year ended December 31, 2025.

"We closed out 2025 on a strong note, exceeding the high end of our revenue and operating margin guidance and demonstrating our continued operating discipline," said Drew Houston, Dropbox Co-Founder and Chief Executive Officer. "Last year, we began reshaping how we invest in and evolve the business, and we're starting to see results. We're strengthening our core FSS foundation while accelerating Dash—both as a standalone product and embedded across the core Dropbox experience. In 2026, we'll build on this momentum by driving engagement and adoption of Dash and investing in future growth."

Fourth Quarter Fiscal 2025 Results Compared to Fourth Quarter 2024

Total revenue was $636.2 million, down 1.1%. 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 0.4%. On a constant currency basis, revenue decreased by 1.6%.(1)

Total ARR was $2.526 billion, a decrease of 1.9%. Excluding FormSwift, Total ARR was $2.504 billion, a decrease of 0.3%. On a constant currency basis, Total ARR decreased by 1.7%.(2)

Paying users totaled 18.08 million, as compared to 18.22 million. Average revenue per paying user was $139.68, as compared to $140.06.

GAAP gross margin was 79.2%, as compared to 81.2%. Non-GAAP gross margin was 80.8%, as compared to 83.1%. The decrease in gross margin is due to increased depreciation resulting from the Company's datacenter refresh cycle.

GAAP operating margin was 25.5%, as compared to 13.7%, partially due to $47.2 million in expenses related to the Company's reduction in workforce, such as severance, benefits and other related items, which were incurred in the fourth quarter of 2024. Non-GAAP operating margin was 38.2%, as compared to 36.9%.

GAAP net income was $108.7 million, as compared to $102.8 million. Non-GAAP net income was $173.9 million, as compared to $222.6 million. The decrease is primarily due to an increase in the tax provision as well as interest expense related to our term loan facility entered into in the fourth quarter of 2024.

Net cash provided by operating activities was $235.4 million, as compared to $213.8 million. Unlevered free cash flow was $250.5 million, as compared to $210.5 million. Cash flows in the fourth quarter of 2024 included $52.1 million of payments relating to the reduction in workforce including the pro rata amount of the fiscal year 2024 annual employee bonus.

GAAP diluted net income per share attributable to common stockholders was $0.43, as compared to $0.34. Non-GAAP diluted net income per share attributable to common stockholders was $0.68, as compared to $0.73.(3)

Cash, cash equivalents and short-term investments ended at $1.038 billion.

During the quarter, the Company repurchased approximately 14.4 million shares for $414.6 million.

Full Year Fiscal 2025 Results Compared to Full Year 2024

Total revenue was $2.521 billion, down 1.1%. Excluding FormSwift, revenue grew 0.2%. On a constant currency basis, revenue decreased by 1.2%.(1)

Average revenue per paying user was $138.91, as compared to $140.23.

GAAP gross margin was 80.1%, as compared to 82.5%. Non-GAAP gross margin was 81.8%, as compared to 84.0%. Effective January 1, 2024, the Company changed the estimate of the useful lives of certain infrastructure server and component assets from four to five years which resulted in a $30.5 million benefit in depreciation expense in 2024.

GAAP operating margin was 27.3%, as compared to 19.1%. Non-GAAP operating margin was 40.6%, as compared to 36.4%.

GAAP net income was $508.4 million, as compared to $452.3 million. Non-GAAP net income was $775.4 million, as compared to $803.8 million.

Net cash provided by operating activities was $951.8 million, as compared to $894.1 million. Unlevered free cash flow was $1.016 billion, as compared to $871.6 million.

GAAP diluted net income per share attributable to common stockholders was $1.86, as compared to $1.40. Non-GAAP diluted net income per share attributable to common stockholders was $2.84, as compared to $2.49.(4)

In the fiscal year ended December 31, 2025, the Company repurchased approximately 60.4 million shares for $1.7 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 254.2 million and 306.8 million diluted weighted-average shares outstanding of common stock for the three months ended December 31, 2025 and 2024, respectively.

(4) GAAP and Non-GAAP diluted net income per share attributable to common stockholders is calculated based upon 272.8 million and 323.4 million diluted weighted-average shares outstanding of common stock for the fiscal years ended December 31, 2025 and 2024, respectively.

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