Dropbox Q2 Earnings: Net Income Rises to $110.5M, Revenue Increases to $634.5M

Dropbox reported Q2 net income of $110.5 million, a significant increase from $43.2 million last year. Net income rose due to cost savings, reduced depreciation, improved margins, and modest revenue growth. Adjusted net income increased to $194.1 million, and net sales reached $634.5 million, up from $622.5 million last year.

Dropbox, Inc. (NASDAQ: DBX) reported its second-quarter fiscal 2025 earnings today, showcasing a significant increase in net income and adjusted net income, driven by cost savings, reduced depreciation, and modest revenue growth. The company's Q2 net income was $110.5 million, a substantial increase from $43.2 million in the same period last year. Adjusted net income reached $194.1 million, up from $194.1 million last year, while net sales grew to $634.5 million, an increase of 2.2% from $622.5 million in the previous year [1].

The company's total revenue for the quarter was $625.7 million, a decrease of 1.4% compared to the same period last year. However, on a constant currency basis, revenue decreased by 1.3% year-over-year. Total ARR (annual recurring revenue) was $2.542 billion, a decrease of 1.2% from the same period last year. Paying users totaled 18.13 million, a decrease of 34,000 quarter-over-quarter, and the average revenue per paying user was $138.32, a decrease of $1.61 compared to the same period last year [1].

Dropbox's GAAP gross margin was 80.2%, a decrease from 83.1% last year, while non-GAAP gross margin was 82.2%, a decrease from 84.5% last year. The company attributed the decrease in margins to ongoing support for its datacenter refresh cycle. GAAP operating margin increased to 26.9%, up from 20.0% last year, primarily due to a decrease in employee-related costs driven by a decrease in headcount. Non-GAAP operating margin was 41.5%, up from 35.9% last year [1].

The company reported net cash provided by operating activities of $260.5 million, up from $230.6 million last year, and free cash flow of $258.5 million, up from $224.7 million last year. GAAP diluted net income per share attributable to common stockholders was $0.45, up from $0.34 last year, while non-GAAP diluted net income per share attributable to common stockholders was $0.71, up from $0.60 last year [1].

Dropbox's financial outlook for the future includes expectations regarding the performance of its Core FSS business, new product initiatives, and adoption by current and new customers. The company will provide forward-looking guidance during its conference call scheduled for today at 2:00 p.m. PT / 5:00 p.m. ET [1].

References:
[1] https://www.gurufocus.com/news/3046450/dropbox-announces-fiscal-2025-second-quarter-results