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DBX Q4 Earnings Surpass Estimates, Revenues Fall Y/Y, Shares Rise
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Key Takeaways
DBX beat Q4 earnings estimates as revenues and ARR declined y/y.
DBX posted a 38.2% non-GAAP operating margin, up 130 bps y/y on lower expenses.
DBX expects 2026 revenues of $2.485-$2.5B and a free cash flow of $1.04B or above.
Dropbox (DBX - Free Report) reported fourth-quarter 2025 non-GAAP earnings of 68 cents per share, which surpassed the Zacks Consensus Estimate by 2.52% and decreased 6.8% year over year.
Revenues of $636.2 million declined 1.1% year over year but beat the consensus mark by 1.39%. On a constant-currency (cc) basis, revenues fell 1.6%.
Total annual recurring revenues (ARR) were $2.53 billion, down 1.9% year over year. On a cc basis, ARR decreased 1.7%.
Dropbox shares inched up 0.2% at the time of writing this article. DBX shares have dropped 7.5% in the trailing 12 months, underperforming the Zacks Computer and Technology sector's 22.3% return.
DBX exited the fourth quarter of 2025 with 18.08 million paying users compared with 18.22 million in the year-ago quarter. The average revenue per paying user was $139.68 compared with $140.06 in the year-ago quarter.
In the fourth quarter of 2025, Dropbox reported a non-GAAP gross margin of 80.8%, down 230 bps year over year.
In the reported quarter, non-GAAP research and development expenses were $130.9 million, down 8.1% year over year. Non-GAAP sales and marketing expenses decreased 13.2% year over year to $92.8 million. Non-GAAP general and administrative expenses decreased 0.8% year over year to $47.6 million.
The company reported a non-GAAP operating margin of 38.2%, up 130 bps year over year.
Dropbox Balance Sheet & Cash Flow
As of Dec. 31, 2025, DBX had cash, cash equivalents and short-term investments of $1.04 billion compared with $925.3 million as of Sept 30.
Cash generated by operating activities was $235.4 million in the reported quarter compared with $302.1 million in the previous quarter.
In the fourth quarter, the company generated a free cash flow of $224.9 million compared with $293.7 million in the previous quarter.
In the reported quarter, the company repurchased 14 million shares for $415 million. As of the end of the fourth quarter, $1.17 billion remained under the existing share repurchase authorizations.
DBX Initiates Q1 & FY26 Guidance
For the first quarter of 2026, Dropbox expects revenues between $618 million and $621 million. At cc, the company anticipates revenues of $610-$613 million.
The non-GAAP operating margin is expected to be 38%.
For 2026, Dropbox expects revenues between $2.485 billion and $2.5 billion. At cc, revenues are anticipated between $2.458 billion and $2.473 billion.
The company expects the gross margin to be 81.5-82% for the year. The non-GAAP operating margin is expected to be 39-39.5%.
Unlevered free cash flow is expected to be $1.04 billion or above, with the capital expenditure between $20 million and $25 million.
Micron Technology shares have soared 321.1% in the past 12 months. This Zacks Rank #1 (Strong Buy) company is scheduled to release second-quarter 2026 results on March 19. You can see the complete list of today’s Zacks #1 Rank stocks here.
MongoDB shares have rallied 30.4% in the past 12 months. MDB is scheduled to release fourth-quarter 2026 results on March 2. The company presently sports a Zacks Rank #1.
Credo Technology shares have surged 95.2% in the past 12 months . CRDO is set to report third-quarter fiscal 2026 results on March 2. The company currently flaunts a Zacks Rank #1.
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DBX Q4 Earnings Surpass Estimates, Revenues Fall Y/Y, Shares Rise
Key Takeaways
Dropbox (DBX - Free Report) reported fourth-quarter 2025 non-GAAP earnings of 68 cents per share, which surpassed the Zacks Consensus Estimate by 2.52% and decreased 6.8% year over year.
Revenues of $636.2 million declined 1.1% year over year but beat the consensus mark by 1.39%. On a constant-currency (cc) basis, revenues fell 1.6%.
Total annual recurring revenues (ARR) were $2.53 billion, down 1.9% year over year. On a cc basis, ARR decreased 1.7%.
Dropbox shares inched up 0.2% at the time of writing this article. DBX shares have dropped 7.5% in the trailing 12 months, underperforming the Zacks Computer and Technology sector's 22.3% return.
Dropbox, Inc. Price, Consensus and EPS Surprise
Dropbox, Inc. price-consensus-eps-surprise-chart | Dropbox, Inc. Quote
Dropbox Quarter Details
DBX exited the fourth quarter of 2025 with 18.08 million paying users compared with 18.22 million in the year-ago quarter. The average revenue per paying user was $139.68 compared with $140.06 in the year-ago quarter.
In the fourth quarter of 2025, Dropbox reported a non-GAAP gross margin of 80.8%, down 230 bps year over year.
In the reported quarter, non-GAAP research and development expenses were $130.9 million, down 8.1% year over year. Non-GAAP sales and marketing expenses decreased 13.2% year over year to $92.8 million. Non-GAAP general and administrative expenses decreased 0.8% year over year to $47.6 million.
The company reported a non-GAAP operating margin of 38.2%, up 130 bps year over year.
Dropbox Balance Sheet & Cash Flow
As of Dec. 31, 2025, DBX had cash, cash equivalents and short-term investments of $1.04 billion compared with $925.3 million as of Sept 30.
Cash generated by operating activities was $235.4 million in the reported quarter compared with $302.1 million in the previous quarter.
In the fourth quarter, the company generated a free cash flow of $224.9 million compared with $293.7 million in the previous quarter.
In the reported quarter, the company repurchased 14 million shares for $415 million. As of the end of the fourth quarter, $1.17 billion remained under the existing share repurchase authorizations.
DBX Initiates Q1 & FY26 Guidance
For the first quarter of 2026, Dropbox expects revenues between $618 million and $621 million. At cc, the company anticipates revenues of $610-$613 million.
The non-GAAP operating margin is expected to be 38%.
For 2026, Dropbox expects revenues between $2.485 billion and $2.5 billion. At cc, revenues are anticipated between $2.458 billion and $2.473 billion.
The company expects the gross margin to be 81.5-82% for the year. The non-GAAP operating margin is expected to be 39-39.5%.
Unlevered free cash flow is expected to be $1.04 billion or above, with the capital expenditure between $20 million and $25 million.
Zacks Rank & Stocks to Consider
Dropbox currently carries a Zacks Rank #3 (Hold).
Micron Technology (MU - Free Report) , MongoDB (MDB - Free Report) and Credo Technology Group (CRDO - Free Report) are some better-ranked stocks that investors can consider in the broader Zacks Computer and Technology sector.
Micron Technology shares have soared 321.1% in the past 12 months. This Zacks Rank #1 (Strong Buy) company is scheduled to release second-quarter 2026 results on March 19. You can see the complete list of today’s Zacks #1 Rank stocks here.
MongoDB shares have rallied 30.4% in the past 12 months. MDB is scheduled to release fourth-quarter 2026 results on March 2. The company presently sports a Zacks Rank #1.
Credo Technology shares have surged 95.2% in the past 12 months . CRDO is set to report third-quarter fiscal 2026 results on March 2. The company currently flaunts a Zacks Rank #1.