Dropbox Faces Core Business Pressure and Revenue Growth Challenges

Dropbox faces challenges in revenue growth due to pressure on its core file sharing business and weakness in its Dropbox Paper product. UBS analysts note deteriorating revenue growth fundamentals for the company.

Dropbox (DBX) closed at $31.68 in the latest trading session, marking a -1.52% move from the prior day. This decline was below the S&P 500's loss of 0.1% and the Nasdaq's loss of 0.33%. The stock's performance contrasts with its prior gains, where shares had increased by 13.72%, outpacing the Computer and Technology sector's gain of 5.94% and the S&P 500's gain of 2.57% Here's Why Dropbox (DBX) Fell More Than Broader Market^[1].

Analysts and investors are closely monitoring Dropbox's upcoming earnings report. Expectations are for the company to post earnings of $0.64 per share, representing a 6.67% year-over-year growth. However, revenue is forecast to decline by 2.68% to $621.66 million compared to the year-ago quarter Here's Why Dropbox (DBX) Fell More Than Broader Market^[1].

UBS analysts recently downgraded Dropbox's stock rating to 'Sell,' citing concerns about demand signals for Dropbox Dash, the company's new AI product. The downgrade also reflects UBS's negative assessment of the core File Sync and Share (FSS) business, which faces continued pressure Dropbox stock rating downgraded to Sell by UBS on AI product concerns^[2]. UBS expects revenue declines of 1.2% and 0.9% in fiscal years 2026 and 2027, respectively, below consensus estimates Dropbox stock rating downgraded to Sell by UBS on AI product concerns^[2].

Dropbox's second-quarter earnings for 2025 surpassed analyst expectations, with earnings per share (EPS) of $0.71 and revenue of $626 million. However, the company continues to face challenges in sustaining positive revenue growth due to deteriorating revenue fundamentals Dropbox stock rating downgraded to Sell by UBS on AI product concerns^[2].

Investors should closely monitor Dropbox's strategic financial maneuvers and operational efficiency, as well as any recent revisions to analyst forecasts, which can impact near-term share price momentum Here's Why Dropbox (DBX) Fell More Than Broader Market^[1]. The Zacks Rank, a proprietary model that integrates estimate changes, currently rates Dropbox as a 'Buy' Here's Why Dropbox (DBX) Fell More Than Broader Market^[1].