Dropbox Q2 2025 Earnings Call Transcript: Second-Quarter Results and Future Outlook

Dropbox Inc. reported Q2 2025 earnings, with revenue of $209.5 million, a 23% increase year-over-year. The company's net loss was $86.7 million, compared to a loss of $84.6 million in Q2 2024. Dropbox CEO Drew Houston highlighted the company's strong customer growth and expanding ecosystem of integrations with other apps and services.

Dropbox Inc. (NASDAQ: DBX) reported its second-quarter (Q2) 2025 earnings, showcasing robust revenue growth and improved margins. The company reported total revenue of $625.7 million, a 1.4% decrease year-over-year (YoY) on a constant currency basis [1]. This revenue figure marks a decline of 1.3% YoY when adjusted for currency fluctuations.

Despite the slight revenue decrease, Dropbox's net cash provided by operating activities and free cash flow both saw significant increases. Net cash provided by operating activities reached $260.5 million, up from $230.6 million in Q2 2024. Similarly, free cash flow improved to $258.5 million, up from $224.7 million in the same period last year [1].

The company's operating margins also demonstrated notable improvement. Dropbox reported a GAAP operating margin of 26.9%, up from 20.0% in Q2 2024. Non-GAAP operating margin improved to 41.5%, up from 35.9% in the same period last year. This increase in operating margins was partially driven by a decrease in employee-related costs, attributed to a reduction in headcount [1].

Dropbox's CEO, Drew Houston, highlighted the company's strong customer growth and the expanding ecosystem of integrations with other apps and services. He noted that the company is seeing early signs of stability in its Core FSS business, even at more efficient investment levels. Houston also emphasized the momentum of Dash, Dropbox's AI-powered tool, which has seen stronger customer engagement in the last quarter [1].

The company's total annual recurring revenue (ARR) was $2.542 billion, a 1.2% decrease YoY on a constant currency basis. Total ARR decreased by $10.2 million quarter-over-quarter (QoQ). The number of paying users stood at 18.13 million, down by 34,000 QoQ from 18.22 million in Q2 2024. The average revenue per paying user (ARPPU) was $138.32, down from $139.93 in the same period last year [1].

Dropbox's net income was $125.6 million, compared to $110.5 million in Q2 2024. Non-GAAP net income stood at $197.7 million, up from $194.1 million in the same period last year. GAAP diluted net income per share attributable to common stockholders was $0.45, compared to $0.34 in Q2 2024. Non-GAAP diluted net income per share was $0.71, up from $0.60 in the same period last year [1].

Dropbox's cash, cash equivalents, and short-term investments ended at $954.7 million [1].

References:
[1] https://investors.dropbox.com/news-releases/news-release-details/dropbox-announces-fiscal-2025-second-quarter-results