Dropbox Reports Q2 Results, Announces $900 Million Buyback Authorization

Dropbox (NASDAQ: DBX ) held its second-quarter earnings conference call on Thursday. Below is the complete transcript from the call. This transcript is brought to you APIs. For real-time access to our entire catalog, please visit for a consultation.

7% non-GAAP operating margin, exceeding guidance. Strategic initiatives focused on integrating AI capabilities into Dropbox services have shown early success, with integrations like ChatGPT and Claude attracting over 150,000 users. The company announced a new $900 million share repurchase authorization, signaling confidence in their long-term strategy and commitment to shareholder value. 523 billion for the full year 2026, and an emphasis on durable growth through AI integration.

Management highlighted the ongoing CEO transition, reiterating confidence in Ashraf's leadership and the strategic direction towards AI-driven growth and deeper customer engagement. Full Transcript OPERATOR Thank you for standing by and welcome to Dropbox's second quarter 2026 earnings conference call. Currently, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session.

To ask a question during the session, you will need to press star one one on your telephone to remove yourself from the queue. You may press star one one again. I would now like to hand the call over to Sarah Schuba, Chief Accounting Officer and Head of Investor Relations. Please go ahead.

Sarah Schuba, Chief Accounting Officer and Head of Investor Relations Good afternoon and welcome to Dropbox's second quarter 2026 earnings call. As a reminder, we will discuss non—GAAP financial measures on this call. com. We will also make forward—looking statements on this call, including statements about our future outlook for our third quarter and fiscal year 2026, as well as our expectations regarding our business, assets, strategies, and the macroeconomic environment.

Such statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those described. Many of those risks and uncertainties are described in our SEC filings, including our most recent report on Form 10—Q and forthcoming report on Form 10—Q. Forward—looking statements represent our beliefs and assumptions only as of the date such statements are made. We disclaim any obligation to update any forward—looking statements except as required by law.

I will now turn the call over to Dropbox's co—founder and co—CEO, Drew Houston. Drew Houston, Co-Founder and Co-CEO Thank you, Sarah, and good afternoon everyone. Before I turn it over to Ashraf, I want to briefly address the CEO transition we announced in May. Ashraf and I are currently serving as co—CEOs, and after this transition period I'll become Executive Chairman and Ashraf will become sole CEO.

We're taking a deliberate approach to the handoff, and I'll remain deeply engaged as Executive Chairman. I want to say a word about why I have so much confidence in Ashraf. When he took over our core business, there were real questions about whether we could change our trajectory. He made a series of difficult calls, and the business has gotten stronger every quarter since.

He's built a strong leadership team and brought a level of operating rigor that has made this company better. You'll hear the results directly from him in a moment. The next phase for Dropbox is about execution and turning the progress we've made into consistent, durable growth. Ashraf's the right leader for our next chapter, and I'm looking forward to supporting him and the team.

With that, I'll turn it over to Ashraf. Ashraf, Co-CEO Thanks, Drew, and good afternoon everyone. Before I turn to the quarter, I want to start by thanking Drew. Dropbox exists because of his vision and leadership over the past two decades.

He built one of the most recognized technology brands in the world, and I am grateful not only for the opportunity to help lead this company, but for the trust he has placed in me to help write its next chapter. I joined Dropbox because I believed it had significantly more potential than the market and customers appreciated. Dropbox has over 18 million paying users, one of the most trusted consumer and business brands on the Internet, strong cash generation, and a global infrastructure built over nearly two decades. At the same time, I saw a real opportunity to improve execution, modernize the product experience, and return Core to durable, sustainable growth.

Today, my conviction is even stronger. Over the last 18 months, we strengthened the leadership team, sharpened our execution, and focused relentlessly on the fundamentals—improving conversion, onboarding, activation, retention, pricing and packaging—and delivering a better customer experience. While we're still early in the journey, the results are encouraging. We've turned Core from a business that had been slowing for years into one that is once again demonstrating sustainable growth.

There's still a great deal of work ahead, and a few quarters don't define success, but we're putting points on the board and reinforcing the belief that had brought me here in the first place. The second thing that has strengthened my conviction is something I did not fully appreciate when I joined, and that's how valuable Dropbox's foundation would become in an AI—first world. Over the last two decades, we have built far more than a storage application.

We have built one of the world's largest and most optimized content platforms, one responsible for storing, synchronizing, securing, searching, processing, and governing hundreds of billions of pieces of content across multiple exabytes of data. As AI makes intelligence more abundant, trusted content becomes more valuable, not less. Every AI application ultimately needs content to reason over, permissions to respect, governance to reinforce, version history to rely on, and infrastructure that scales globally and securely.

Those capabilities we have been building for nearly two decades, and they're what allow us to turn AI into durable value for customers rather than a feature that is easy to copy. That realization has shaped how we think about Dropbox's future. Our priority remains exactly what it has been since I joined—continue strengthening and growing Core, and build on it. I think about that opportunity in three connected parts.

First, we're bringing Dropbox services onto a common platform built around shared content, identity, permissions, search, and AI. Smaller teams, increasingly powered by AI, can build richer workflows faster because they're building on capabilities that already exist instead of recreating them. That also means showing up where our customers already work. We've launched integrations with tools like Claude and ChatGPT, and even without much dedicated investment behind them, we've already seen over 150,000 users connect to the integrations, an early signal of how embedded Dropbox already is in the way people work.

Second, we're embedding Dash intelligence directly into Dropbox itself, rather than treating AI as a separate destination that customers need to learn or adopt independently. Customers expect intelligence to be a native part of how they interact with their content, helping them find it faster, understand it more deeply, organize it more effectively, and ultimately do more of the work around it—all grounded in the trust, permissions, and context already built on Dropbox. One of our biggest learnings throughout building Dash is that customers respond most to AI that is grounded in their own context and helps them get their work done.

That's informed how we think about Dash going forward. We've come to see the bigger opportunity as Dash and Core together—bringing that same in—context intelligence natively into Dropbox for all our customers, not a standalone product for a subset of them. The third is using those capabilities to build deeper workloads in the markets where we are best positioned to win. The goal is not to become a broad software suite; it is to go deeper in a focused set of areas where content sits at the center of customers' work and where our existing assets give us a genuine advantage.

Replay, our video and media review and approval tool, is a good example, and we're validating adjacent opportunities such as digital asset management and other AI—powered workflows that extend naturally from our platform. Let me make that a little bit more tangible with an example. Take West Chester Publishing. What started as a place to securely store and sync files has grown over time into the foundation for much of their business operations.

The core Dropbox platform they've relied on for years also powers a custom portal they use to collaborate with internal teams and external partners. On top of that foundation, they've adopted Dash to find and organize content, helping teams quickly synthesize information and draft materials, while piloting agentic capabilities that automate previously manual and time—intensive workflows. We're also seeing that the infrastructure behind Dropbox has become increasingly relevant in an AI—first world.

AI models need trusted content, source permissions, audit trails, governance, multiplayer functionality, and workflow continuity to deliver real value, and those are capabilities we've been building for nearly two decades. As AI companies build new products, many want to leverage that existing foundation rather than recreate it themselves, and we're seeing this demand already with our ChatGPT and Claude integrations. It's still early, but we believe Dropbox can play an increasingly important role as the layer that connects AI to trusted customer knowledge and infrastructure across a broader ecosystem.

That, in short, is our strategy: continue executing to restore durable growth in Core through foundational improvements that increase our baseline; use that stronger foundation to build increasingly intelligent workflows for our customers and grow the flywheel that made Dropbox successful in the first place; and over time, put the platform we've built to work more broadly across the AI ecosystem wherever that creates real value. Turning to the quarter, our Q2 performance was largely the product of the foundational work that we believe is so critical to returning to sustainable growth in the long term.

The platform, intelligence, and workflow strategy I just walked through is what we believe compounds on top of that foundation and unlocks a higher level of sustainable growth over time. We continue to see positive year—over—year revenue growth in Q2 excluding FormSwift, and we added 96,000 paying users, our third consecutive quarter of paying user growth. 5 million of unlevered free cash flow. Within Teams, our continued investment in pricing, packaging, onboarding, checkout, and activation translated into stronger conversion, and Teams net new ARR grew sequentially.

Within Individuals, targeted retention initiatives—along with Apple Pay, simple and a clear upgrade experience for customers approaching their storage limits—all contributed to a stronger monetization. These are not isolated wins; they are the kind of steady execution that compounds over time and is returning Core to sustainable growth. At the same time, we continue to build toward a smarter Dropbox with AI natively embedded in the experience. As the product has evolved, we are transitioning the rollout of what we previously called Dash and Dropbox to the next—generation Smart FSS experience, which we are currently testing with a select group of customers.

This evolution does not change our rollout timeline, and we remain on track to significantly expand access to our base throughout the remainder of 2026. We will scale thoughtfully, validating customer value, engagement, and business impact along the way. As we enter the second half of the year, our priorities remain clear: keep building on the momentum we have established in Core; that stronger foundation to innovate faster, adding AI as a native, in—context capability across our product portfolio.

That's the platform, intelligence, and workflows we believe will define Dropbox's next phase of growth—reaching more of the over 18 million paying users already on Dropbox and leveraging the same flywheel that made us successful in the first place. With that, I'll turn the call over to Ross. Ross Tennenbaum, Chief Financial Officer Thank you, Ashraf. When I joined Dropbox, investors were asking whether our core business could grow again.

Today, I think they're asking a different question. Not whether we can grow, but whether that growth is durable and ultimately how much we can sustainably grow over time. Q2 doesn't answer those questions completely, but it does provide another meaningful proof point. Ashraf laid out three connected parts to our platform and AI strategy.

I think about how those translate financially in three phases. Phase one was simply returning our FSS product to growth. Over the past several years, we had increasingly shifted our attention away from our FSS product because we no longer believed it represented our greatest opportunity. What changed was refocusing on the fundamentals.

Things like pricing and packaging, onboarding, retention, checkout. And that work has returned us back to positive growth. Phase two is where I believe we are today, proving that growth is durable, not just a couple quarter result. We're encouraged by what we're seeing.

Three consecutive quarters of paying user growth, Teams returned to positive license growth, and improving retention. But we're not overstating where we are. What lies ahead is proving to you what we believe, that we can build and enhance products that will provide value to our customers and drive growth higher. Phase three is where Ashraf's strategy to bring Dropbox onto a unified platform, embed Dash Intelligence natively, and build deeper workflows around our customers' content becomes increasingly important financially.

As we do that, the question changes from whether Dropbox can sustain growth to how fast we can grow over time. One thing that has strengthened my conviction since joining Dropbox is recognizing that we've spent nearly two decades building and running infrastructure and intelligent services such as our content processing platform that becomes more valuable, not less, in an AI—first world. Agent or human, we believe there is no future where there's not a lot more content. As Ashraf described, Dropbox is far more than a storage application.

It's a trusted content platform with capabilities around storage, synchronization, permissions, governance, search, and content processing that become increasingly important as AI becomes embedded in how work gets done. We believe those assets give us a differentiated foundation to build on both inside Dropbox and, over time, potentially other companies can also build on our content platform. We'll pursue that opportunity the same way we've approached the turnaround of Core, with disciplined execution and capital allocation. We won't scale investment because an opportunity is exciting.

We'll scale it because customers demonstrate they value it and because it generates attractive long—term returns. Ultimately, our objective is to compound free cash flow per share over the long term through sustainable revenue growth and a strong margin profile, investing where we have the strongest right to win and returning capital to shareholders when that's the highest return use of capital. Q2 doesn't complete the journey, but it reinforces our conviction that we're on the right path. With that, let me turn to our financial results.

Unless otherwise indicated, all income statement figures mentioned are non—GAAP and exclude stock—based compensation, amortization of purchased intangibles, certain acquisition—related expenses, workforce reduction expenses, and net losses on real estate assets. Our non—GAAP net income also includes the income tax effect of the aforementioned adjustments. 5 million. 7% year over year on a constant currency basis.

1% year over year. Relative to our guidance, the outperformance was driven primarily by improving core FSS trends. 566 billion, up 1% year over year excluding FormSwift. 2% on a constant currency basis.

19 million paying users, a sequential increase of approximately 96,000, ahead of our expectations coming into the quarter. The outperformance was largely driven by outperformance in our Simple SKU. We also saw positive Teams license growth as a result of our ongoing pricing and packaging initiatives. 32 in the year—ago quarter, driven by FX rate tailwinds and shift to more monthly plans.

6%, down roughly 60 basis points from the year—ago period, primarily as a result of compute costs associated with rolling out additional AI capabilities to our Teams base.