Dropbox (DBX)

Rob Bradley Head of Investor Relations
Drew Houston Co-Founder and Chief Executive Officer
Tim Regan Chief Financial Officer
Mark Murphy JPMorgan
Brent Thill Jefferies
DJ Hynes Canaccord
Rishi Jaluria DA Davidson
Jack Nichols KeyBanc Capital Markets
Zane Chrane Bernstein Research
Call transcript
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Good afternoon, ladies and gentlemen. Thank you for joining Dropbox’s Fourth Quarter 2020 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions.

As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Dropbox’s website following this call. it Mr. turn now will over to I Rob of Investor Dropbox. Relations for Bradley, Head Mr. ahead. please Bradley, go

Rob Bradley

including to our December to regarding sustain generate results and you revenue future quarter positive our Dropbox quarterly those statements projected organizational our enhancing call, factors and Statements trends, during September the our call. in could offering drive through XXXX. capitalize opportunities fourth cause in included expectations estimated and and XX-Q subject remote business, our actual that XX, products, profitability our to include overall in expectations our unknown call investments; to future growth, as capital in retention our are user our XX, free as the structure; risks XXXX a our strategic ended expectations new opportunities; Today distributed prospects our results be materially forward-looking related described this timing ended and financial model; opportunities on for impact XX-K the shift by statements this results to discuss to charges volume Thank growth will of M&A ability and and developing and a products the including of ability plans, that work risk our or employees afternoon generate known result our implied performance operational quarter flow; earnings and and ability good financial included and factors welcome and regarding efficiencies value. and benefits were earlier. of repurchases, share work on as from anticipated risk other results that result features our well to the These and and strategy differ future or business First our partnerships; financial cash to those goals allocation year ability Form strategy of and future our and the ability our our execute expected key for impairment regarding particular, our changes those Form including we expected market uncertainties shareholder of including will to Dropbox’s to may to Virtual a as to achieve XXXX

predictions of You and should as events. All except them as required not update by we make statements assumptions to as beliefs statements this on that on forward-looking of rely call today are obligation undertake forward-looking our law. on based we future and no

filed with Executive to supplemental Chief Dropbox’s materials may X-K website Form today or on our like and the posted These to to be Our isolation be found non-GAAP now Houston. today in include of measures. at GAAP the a SEC discussion investor Drew? will financial Co-Founder Relations Drew I our non-GAAP in substitute would also be investors.dropbox.com. over Officer, as furnished and with which release, earnings our addition not was results results. GAAP for A found reconciliation our should considered to non-GAAP from in measures may and call turn the Investor in

Drew Houston

we review hand an our for call and Thanks, year QX for the give who this abruptly providing Tim Dropbox pandemic. shifted the to overview our Good with from We and many through to our the results full was Financial transformational year, world Regan, here a on reoriented our performed as for for the and some the adapted of to everyone We fourth of ourselves landscape, work our helped I home of call. changing quickly customers recapping thoughts Even priorities our I’ll I’ll new roadmap well. XXXX distributed and am share our working Officer. our and from new XXXX Rob. financial to QX accomplishments XXXX that presents. address the and with earnings afternoon opportunities XXXX start long-term to Chief quarter many will product over today welcome the our call business model. Tim, guidance challenges to fiscal year and due XXXX. Then transition. by environment

lives, and the with For in teams. we ended XXX,XXX we in more the throughout more introduced on important the course work. of And we launching delivered paying year, our home at features $X both of full to secure and than start, remain We XXXX year, billion content. increased focused we the features and new than their most XX billion and in profitability. half XXXX crossed help we customers meaningfully and revenue, people our several million $X.X To ARR at users business their organize help protect to products first

zero-knowledge Dropbox passwords The store one across from with can first highlight feature With in to encryption. devices is passwords place, our users anywhere Passwords. Passwords access and secure sync

our Vault, And so hardware to of most features valuable which to content protected Dropbox when up the content new desktop, trusted the for engagement believe and access in code. access the better failure. is unique drive they retention retrieval We secure Vault across finally, with also can user of will go We can we their event these documents or layer that local emergency customers’ computer additional to grant where and base. also backup, for automatically downloads and friends access an our security users accessible backs users’ introduced needed. PIN on folders introduced a content The family,

data support families helps place and videos signals central In features, launched content family share we terabytes one a as files helps bill. their Family and members as Family much XXXX encouraging. in two rolled After more even addition with called Dropbox secure to investments to being to shared like been saw new we in on better lets with we share. broadly We’ve in as also Family distributed can products files been SKU single photos, of building from has plan engagement customers for the in out these launch, work. relied product early of products to adoption a a Dropbox documents. the we keep that work capabilities initial effort making keep new up our portfolio them six user across our and our done collaboration get content Plan the which and quickly an our adapted October In in Plan, roadmap connected elevated their out year positive for

For making a example, to the without sign integration need with leaving HelloSign eSignature introduced ever it increased, as we deeper Dropbox. easier documents for

into signature resulted in in languages base. user and in and than more and HelloSign’s Dropbox user steps strong market global We the paid to a address also to These ARR in launched growth end XX eSignature requests. better additional cross HelloSign increase sell user help seats XX% our

all We up context important the evolved alongside we standalone messaging and a that information solve to and problem. Dropbox file variety is different experience. also and to scattered lives classic to the into designed each us across of The experience apps, of Spaces leaving an Spaces it need Dropbox together. are piece tools files everything

workspace users work and and to and distributed a adopt had and especially of out our from Creative creative new of map Migration stress to to don’t put this permissions community to get to to find media early Dropbox. is new migrate products. files. and to excited have variety made to progress. kind add-on, were the users they with finally, off the to many and today’s and customers and and more XXXX, we on relies local forced other of beta, In where it is broadly the business new bringing Slack The storage together were quickly can to our work passionate app in structures face their as remotely ways XXXX, as content to our any working simplify or our large help time Dropbox projects cloud rights saving all others. Dropbox creative, easily private access experience, of helpful projects, the customers out is system like currently for on goal done kick when challenges of developed teams add-on The headache to tools take traditional juggle Spaces friction. to reducing track migrate solve they investments facilitates organize in we add further And Creative large automatically on securely storage Moving more and simple and all offerings Zoom of better solutions this single teams new These our tools simplifies roll storage with lot commenting media file Data experience social Spaces heavily have also work we’re working to cloud. files in the they expanded and The workflows. to files frame-based solutions viewing, needed and file with Tools seamlessly with and collaboration This but remote to has and flexible a workflows making new while of And management, the secure. Migration post-production key most demanding quickly transfers virtual The differentiate workflow handle year. a can their and They by remote allows Tools customers’ can Data add-on transition and Dropbox. some

in-person we together In Virtual and our experience. of both reorienting the with our bringing roadmap, addition transformed best our culture Company and First, remote to shift to product work the

meaningful offers transition and live reimagining and Most that offices their We’re build importantly, an believe places truly collaboration. work. preserving the products our better offers to our and Virtual for going flexibility freedom in-person mission First work our to opportunity and dedicated even distributed us remote to customers as we

end faster more of a the steps efficiently. We of also operate number took XXXX towards to and

and us we collaboration together XX% design, through structure, our President, operational on our elevation month, coordination bringing an new functions President finally, in announced against teams. Timothy between and engineering, First, our structure, our force strengthen and our and our to streamline development, will better customer-facing Virtual Timothy’s to Young. closer technology teams First align we accountability reduction our customers product help discipline And go-to-market product also under last strategy. to simplified focus our

So stability we and year and execution product we in while up to roadmap, this structure, believe set our past for are XXXX. leadership meant changes team

We each little to more for and I’d the walk have three company like detail. through year with one priorities you a

central important our Dropbox have core store has our value customers year always led been our to Dropbox of and we’re to the millions evolving This our product. layer core is become global and Since adoption. of founding product our has most experience evolving This trusted First content. organizational share growth all viral and their across content. the to users’

We reduce file collaboration to sharing improve even and will friction make more and seamless. functionality aim to

paid these drive and expect will SKUs. into retention activation, We help migration improvements

of to for we believe and which automated features, and updates organization lead the content New the growth user core will business. access retention simplified sharing included and greater

expand our the core on product will and our in Second, force. build increasingly an invest will new pipeline success we XXXX, we serve continue with to early distributed experience. In beyond to HelloSign work

help go-to Our through planned campaigns teams the for will eSignature, and position for solution individuals and as investments targeted prompts. HelloSign awareness

pipeline approach. to plan add to progress they finally, plan and last in year, like our Dropbox Late efforts product add action after indispensable for also targets a portfolio And be the Spaces with integrations our an our will offer experience to on these us customers of notes, long and operational as also our our scaling deliberate and financial in to we we XXXX and a complement so more collaboration be our previewed management, make and a items like and with adjacencies. deep partnerships team unique for use Investing partnerships We’ll focused meeting lever part project makes more workflows. value resources. to seamless provides Zoom workflows. our strategic single stay and meeting. our M&A WebEx excellence We product that they while in other acquisitions content broaden capabilities disciplined an as continue new long-term integrations product users we’ll in with stay place connected even in and to continue can users’ leave important their for the our we being strategic Spaces of towards

with the margin combined $XX efficiency improvement, we And flow. points XXXX looking We’re the increase we to operating of storage We’ll focusing improvements throughout number optimize we million build progress infrastructure also our ROI. nine cash as users a opportunities agility ahead, sales content. the of add in We’ll and really R&D and organization and to made in in will and proud of driving in investments ways. in with continue and efficiencies and best marketing, on free continue drive

commitment year opportunity demand I’m trust and expect capabilities walk it. environment actions that We We organized strength and work care turn In I’ll demonstrated now our improving still to through place collaboration to in these our Tim of content the as we to home for success changing the to experience. lines work on cash store we’re macro and millions summary, increased We blur over our rely our of all one growth. and to for our last for become strategy our us right for in growing is our the investing us will customers. on flow. results. team’s continue financial people ongoing of our collaboration adapt and and take believe quickly and the most their share now combined long-term Hundreds there proud is between the financial files already to I more against seamless profitability goals, we executing around and up XXXX. while place of as expand have set to we to free to it plan the important continue to focused believe their

Tim Regan

for you, we are I our reminder the Thank this Drew. a Star financial context we focus provides what as where and thesis begin on want North our and of headed. to investment with

shareholders increased of capital Here growth, our acquisitions by align free financial investment portion targets. targeting significant to doubling $XXX revenue the flow our quarter against for improvements organic to our are generate strategic to full through core execution our value and the thesis; believe demonstrate against talk repurchases investing continued progress our and revenue these and returning XXXX share of We to year that annual to XX% objectives this annually cash billion context, shareholders. margins capital and our long-term goal share long-term reducing year-over-year initiatives a for annual flow allocating like of operating fourth our in count. cash with XX% free principles continued the allocating XX%, to driving objectives to $X by fourth results, million. that will our with quarter for With XXXX, which Total I'd

an year-over-year. year-over-year billion, quarter have for not period. fourth did up ARR revenue Total was rates impact exchange for $X.XXX Foreign on this growth the XX%

We and drive ended approximately features, Average growth the paying users HelloSign in $XXX.XX. XX.XX SKUs new release the and of ARR growth value-enhancing quarter of and in the million the per plans. products to the We for across paying subscription added paying XXX,XXX through introduction revenue with add-on continued quarter. continued new user was year users fourth

had wanted Before products adoption to we in fourth in the I turn the highlight the P&L, add-on had of team XXXX. I introduced to some driving the customer wins where new we success quarter that

data how United large cloud-based pleased with provide field First, in governance teams such secure, collaborate would of customer. that transform on-site they our with announce work project one providers are selected finding Dropbox They and how and their that largest and turned company along ensure class, we solution to the technicians a their to Dropbox a to add-on managers and solution we files. the States was content signed workers. as for to storage field energy to security on the highly-sensitive Committed best Dropbox in IT modernize a

and length requirements a part the company governance the of adhere Given solution. that to, of our must add-on projects compliance was the data critical

securely costly space infrastructure. ability will empower their media on-premise XXXXheads creative add-on along consolidate workflows. is move content Europe. of have and critical of workforce creative a and collaborative Another the the strategy on their Creative the data processes. was approached their part is for to Dropbox Paper Tools a puzzle global making piece as their of their with will as highlight XXXXheads content win exciting XXXXheads to company be most and secure from part operational a based one Creative in-house. their creative in XXXXheads Group, manage standardizing away Tools while the By in of XXXXheads single to Dropbox all XX% created and

of to years XX access previous into to these company ability content. allows for inspiration data and campaigns the addition, In dip historical creatives

income I mentioned that intangibles, acquisition measures continue an of stock-based to the non-GAAP further indicated, of note related discussion assets. unless compensation, amortization statement and and impairment all certain with are our we of Before otherwise expenses to real would purchased of P&L, our estate HelloSign like excludes

with income Investor with on net Relations X-K losses today and SEC our also filed in may and GAAP gains tax earnings equity excludes in of supplemental income the the was includes net effect non-GAAP the A investments results materials aforementioned Our reconciliation furnished our and which of on non-GAAP the posted be website. found adjustments. release, Form investor to our

be used investor our expect part in our we charge supplemental our call recorded our to taking the regarding steps portfolio XXXX. this in portion as impairment quarter, million moving vast full we First also recording may we real the Virtual assets real the an related reminder, that previously $XXX the in assumptions incurred be range de-cost guidance the of our of our shared rate impairment are of to lease incurred in facilities. information to work on with we value Additional $XXX majority charge related anticipated estate subleasing fourth impairment a charge our the to obligations an existing assets One We found third in our XXXX estate quarter materials. a million. fourth $XXX and million as quarter model, real be to estate to earnings of to by of not do In of recover exchange to

and economic European to months, over $XX expect the current XX conditions. the depending range market and zero to to continue We between next incur million relating charges which leases could additional then certain on

in primarily of margin margin quarter, year-over-year on an infrastructure our let’s improvement was is gross percentage representing for a result basis. a of unit increase our X P&L. points the Now efficiency Gross with gains continue cost XX% The hardware. the with

that fourth driven real working in Turning from of write-down our revenue, reduction which facilities $XXX our costs, like from employees the I’d Fourth to XX% was in a from million categories to home, result stemming operating by our the as expense well of expense expenses. in G&A expense XXXX. the lower XX% XXXX. of all to and which X% a million quarter of $XXX compared million or of note to quarter in assets or related which QX or was depreciation quarter benefited revenue estate as in fourth as impairment. R&D decreased in of of revenue Sales XX% of to the quarter revenue, marketing $XX of decreased compared the XX% XX% of decreased compared revenue expense revenue was fourth XXXX.

lower to addition tax from overhead, G&A non-income certain reserves. of benefited non-recurring releases In

over improvement As of represented which fourth quarter the million, we compares XX%. EPS margin the share quarter shares a quarter per for XX% XX% the of margin outstanding, diluted $XXX fourth the which from profit based to million in XXX fourth on $XXX of up per share a $X.XX in quarter income Diluted fourth is was earned XXXX. in operating the operating of result, operating quarter, fourth XXXX. This for was million XXXX. average $X.XX weighted Net

quarter. our Moving resulted flow operations cash cash quarter leases added short-term $XX and during on the billion. we in flow. balance center data In million quarter, to equipment. in Capital of for quarter fourth fourth from $XXX million or finance free Cash the XX% of million million cash cash was $XXX flow revenue. and $XX $X.XXX of We with ended the expenditures of the to investments

repurchase the our intention million with million this repurchased In XX potential our fourth shares the authorization addition, quarter pace exhaust under in with line which the we this our spending we the $XXX authorization In to shares of of repurchase first million. the shared call, to end third during share at by increase $XXX quarter we quarter existing XXXX. intention

was billion, Gross XX% relative was totaled and from was of investment Cash which XXXX across operations million. $X.XXX Now been let's XX% points percentage revenue rates full-year XXXX. points margin full X thesis. improvement yielded ability XX% up XXXX. our average year-over-year for was have $XXX XX%. the expenditures turn which free year, for up XXXX basis significant results. million growth for our to demonstrates would cash XXXX revenue. the XXXX, representing year-over-year On against million our the which flow to XX% year This execute Total growth. $XXX from of X XXXX constant was for Operating $XX year-over-year or from flow was margin commitment percentage currency for a to Capital

XXXX consideration headquarter cash the million, Excluding In allowances of net spend payout XXXX $XX revenue. of XX% we $XXX million improvement our flow $XXX now million for guidance. $XX million by $XX lines tenant holdback have deal equipment. and also been of HelloSign of would or of Net free our data increased finance lease to lease I’d our million. introduce center finance quarter added to and like for repayments, balance first full-year

in XXXX, For recent million. a expect to account for based average to the and range in midpoint of exchange guidance points first be this on at quarter $XXX combination guidance X.X the of are of the Currency and of million $XXX this historical assumed growth rates. we approximate revenue of rates an quarter

non-GAAP margin in to severance in This approximately XX.X% of be expect XX%. related in impacted the million operating the paid guidance range QX. to margin reduction We by to $XX force a benefits employees and excludes to

in range average million to XXX the trailing average diluted expect XXX Finally, our shares to XX-day shares million we of be share outstanding weighted price. on based

we guidance X to year and billion. be full to combination points based year expect in midpoint rates. $X.XXX the an rates at of in approximate of historical $X.XXX guidance a the account Currency range and average on XXXX, this for revenue exchange of billion this the growth of For recent are assumed

be to margin X gross expect point approximately than fiscal higher We XXXX.

This also XX%. QX. severance the non-GAAP paid operating XX% range to in excludes We be benefits the of expect in margin aforementioned to

to million deal force. approximately of of cash and our cash severance XXXX We $XXX the our acquisition related million includes of HelloSign of $XX comprised to range in to for outflows, be $XX reduction payments in million. million This $XX of flow million to in installments free one-time holdback expect consideration $XXX the related

million be This our XXXX shares expect to of impact to and the range weighted shares. to share our commitment program. diluted count in the XXX million repurchase in average our XXX share reflects outstanding reduction we Finally, of

In addition guidance, formal wanted expectations our on for this to to some further XXXX. share I thoughts

formally to context expectations While want we for in I metric on provide paying guide don't our users, some this to XXXX.

is and in As without drive efficient over paying growth ARPU. profitable to either ARR ways in indexing specifically a objective our on or growing reminder, users

seat part motions costs As additions. this customers. as which acquisition the expand intend also we plan could the our are behind average greater workforce Conversely, which land go-to-market are opportunities most pursuit and we customization, could that and higher efficient consider business we minimize our lead signals strategy to the are additions certain self-serve mid-market lower user and and carry of and of reduction, higher prioritizing user across prices, lower quarters. positive our small of individual, we seeing of to in adoption Family paying to from degrees our lead early paying which Accordingly,

in capital and to in while focus more additions to strengths variability future. paying that existing million be our new see our our our CapEx to million XXXX. $XX cash efficient in revenue in approximately the our expect $XX expect finance additions user the of we may X% engage in we strategies range result, will of go-to-market Overall, in products. and expenditures, on Separately as investing a to to As us we be we most leases related continue to to allow our

program of to authorized XXXX. plan still want previously plan the first We in to repurchases. to capital our exhaust share shareholders the return our $XXX reiterate million in of quarter Lastly, to share I form repurchase

In progress on targets $X in flow In and a our portion addition, repurchases, of has of and allocate our to investment keep count. our for consistent authorized thesis. our an free XXXX achieve with goal us repurchase the XXXX billion to to our plan significant share our long-term our with annual additional reducing trajectory Board our conclusion, share cash program strategy share a

and intend to While targets growth. are sustainable this approaching margin continue revenue we for invest gross to year, our margin operating we

target of billion. may savings growth Drew reinvest our some $X the now sharing cash As forward are a look efficiency XXXX to turn we committed that it closing to remarks. to progress for back therefore model our we initiatives With result, of that, our from opportunities. goal free remain way. and our generating I’ll flow We into the along We

Drew Houston

you year our long-term responded. of making made for unpredictable Thank focus necessary joining changes growth ensure and today. and while pursue operating efficiency delivered you, and proud team improvements Tim. And XX% as in us We XXXX targets. all our thank our I'm is profitability was to an with how business we

We’re ahead distributed world thrive the in to suited and call users we’re Q&A. help to uniquely our road And excited for about new open the believe up of the that, work. with I’d like Operator?


comes Instructions] Our Mark you. Murphy Thank [Operator JPMorgan. with from first question

now open. is line Your

Mark Murphy

us some into the Yes. you think had of given for Drew, insight are you Thank pandemic? you. trends with what assuming XXXX or tailwinds from previously in terms any lingering I headwinds rates. tailwind? importantly, this think Or a do you And of conversion year? More playing of How that it do will more and trials out see out? a how you headwind? net

Drew Houston

the for Yes, so Mark, question. thanks,

to elevated we broadly, – [indiscernible]. onset Dropbox we shifting of given of are that, that So and lot tailwind, in the for the has mostly work distributed that working starts, screen you're important a I this be pandemic, folks like as instead think pandemic will we shared during to And up. trial beyond then year – a first engagement broadly becomes demand we isolated out mean more was more when a surge things the in the which the the had think of last been year, in half. and

a work before, very lot of experience their see virtual opportunity So in the to we as experience. we've a It's a all of pain content we – organized. and fragmented address keep distracting to points overwhelming and see need shared lot Everybody new now. has

us. think it's we for huge So a opportunity

Mark Murphy

it's just as arrive on through of And to think And growth at growth wondering some and balance framework? you at this point? above you much think do X% for Or trying Do there I be you're dissect at look envision sort we I'm a of level know deemphasize to crossing roughly eventually that do where users each? Drew. could we you, growth in of we revenue QX, paid balance growth too the that, Thank multiyear ARPU. how across some Okay. going single-digit out Tim, when periods when sort high level, is mid- the scrutiny growth growth follow-up, user but a X% in ARPU you paying that

Tim Regan

between focusing where we lower ARPU, where Family our Sure. did variability users early year, in on a the November. and not my which adoption We paying the user as of ASPs, we as last may Stemming greater see are may carry few metric. best paying our as ARR plan, And other overly things, And strategy. additional larger higher our positive Thanks don't just seeing Mark. on on deals some conversely, new of pursuit launched this customization, for focus that provide to you key or of from acquisition we the minimize we reflect strategy additions. net we some know, to costs our paying and in may degrees some remarks, signals given the guide commentary optimize don't a formally lever one question, I do users, prepared our while for

types users So efficient focus new as of in is paying of we metric. investing key to our and again, indicative in new and why where these go-to-market dynamics And overall, continue our users strategies while more and variability our paying focus see competing our ARPU do ARR most profitable products. net we existing may between year, this we on on

Mark Murphy

Thank much. you very


Thank you.

question comes from with Jefferies. Brent Our next Thill

open. Your line now is

Luv Sodha

– Thill. end is of any to Luv the for it This motion. I Brent was branding guys Hi. on there the you one from go-to-market initiated wanted the at benefit remember Sodha Wanted campaign? ask I to QX. on

have the impact, more on that users did mean So team’s would any? if any these positive on future? And the specifically in motion, changes you're less focused that go-to-market

Drew Houston

awareness drive to for this. in well, marketing Sure. them work of context, have to have in I for as – businesses. Dropbox elements for we teams funnel invest highlighting QX and expectations all and as a our drive And there. can had campaign to solution success brand did basically the campaigned and we they to mean, and take of I continue a

teams. this ours is mean, focus as work, we self-serve very we're say of at XX% our strength and scalable have really on big of teams, we've subscribers efficient, shared, far engine. Dropbox on As proportionately I businesses focused that a we're as I'd using

has different prefer our where one maintaining ASPs, returns self-serve that We our of we I our self-serve strength, the which go, in and of channels. to allocate just and all across Dropbox that we're another going far optimizing discipline to more is of as as have we higher going lower really organizations channel, – – Because scalable dollars engine mean, viral. we're or example costs, see – as just cost acquisition higher to see brought investment shapes and in But sizes. all

really major it's refinement incremental shift than a return. the So a into more highest in dollars area going strategy, of

Luv Sodha

spend? terms of maybe Can follow-up, on will one So I side, paid the you. see users? if it. XXXX? kind to Thank a be normalization expect we new do tailwind of SMB And – type may, like what Got net in that of in quick you some NNPU will

Tim Regan

And out the expect SMB. as question. far on then I great NNPU how Mark back our this what I as to gave just And should perspective. a an guidance I play from that think would we revenue to all look just to point It's for to have commentary

Drew Houston

lot lot customers, are a of of macro – Dropbox saw working SMBs and a in we to with we from home. And while able find the SMBs been environment general, in have environment, continue knowledge macro lot happening well, there's workers that the stability a

less we're sectors, sure. for than So other impacted relatively

Luv Sodha

Thank you.


Thank you.

comes DJ question Canaccord. with from next Hynes Our

Your now open. line is

DJ Hynes

added I years. would this have what move thought demand least work. about Hey, the decent there, the to you Dropbox, ask pretty slowdown that given couple a look, levers mean, year, be environment new right? conversion saw to user we obviously and in users have guys. free of I would for of want last I at right, relative And thanks number distributed to the Drew, the net a

to the still what the never So conversion? Like we triggers user there, that huge it segment reaccelerate and user I the pull for there's guess can that's that a the levers free the effective? service? is Are getting less question going have base that just deeper are to pay become there's that base is this you out just into free

Drew Houston

continuously and our you of headroom we have free Sure. I have number conversion. users, lot out, with convert mean, a a we as free we And improving still to been see users. ability drive of to pointed levers

So we great I experience, product mean, adding just start more. with customer a value, building

a example, we've content individuals features of you launched at some their keep around, we the for when of secure. new portfolio helping look last things launched year, So

expand, like we've so So features another as And them those more things on. paid on. the and and drive and conversions and teams trials, Passwords, Computer things like that, drive then Backup, goes lever list Vault, seen that's

of optimize a And levers we are – also takes we that of all often there number users to them. convert. So different for time basically, it and

Dropbox. So like to you time it up there time some sometimes involved, take are can constants you fill – your for

it and the So join a if or and then then hurdle, – team. that is one might using home at storage you're at you work start using start you

– some a for bit monetizing effectively there and user convert, can and is levers, driving time it trade-off optimizing and basically there's of and of they're there of So possible. there. more – growth the of and base balance a folks with – them a we're are to quickly for as a some take And as engagement we're number

DJ Hynes

Yes. Yes.

Okay. And then a Spaces. question on

to became in is doing seeing So as before with it in guess we Spaces the paying the Spaces working? like the what should what that are available be platform users organization, weren't to beta? you attention that strategy outsiders do I And private says they

Drew Houston

room we with foreground content workspace in just to Spaces its stand-alone realize than or experience into started experimenting there's one shared pretty more cloud desktop folders a is that Last for and a in a area in is and And a we adding it's and evolution. that. like we'd app, project, a more collaborative year, experience. what where more little for dedicated of this instead evolve features the a files is early new the the so content decided Sure, of And files. that bit well, things enough folder it and full

organize with Dropbox files and to one docs it's give else. their teams is Google Tables and be able Spaces their what Air projects. place to work for And around to for we're looking and So – all everything

of those some of that new – that – are so problems kinds these our is customers. engagement And we're solving for

So engagement the – kind of we to that's want but see.

Spaces the into excited quarters. partnerships some in bring about Spaces, have surface your pretty able we'll with so on that area it ways. all video content in that on said early, where new we to coming working deepening share and of Zoom We're meeting more experience So the be new also with Spaces; with be is to will is Webex the you'll

on So stay that. for more tuned

DJ Hynes

color. for Okay, Thanks great. the


you. Thank

next Our question DA with Rishi from Jaluria Davidson. comes

now Your is open. line

Rishi Jaluria

much it us And then us to adjacencies like wanted acquisitions got how Hi, more you M&A Would inorganic, that start by sense consider during Thanks it did guys. to I based? product I've make opportunity. to technological. past, something remarks to so on HelloSign? going my you what be which potential Maybe those for taking a know give a was But Drew, akin where Would give some you're mostly a prepared M&A? with the would thinking most color made were sense be? comment you if about some about And follow-up. a the be as I questions. made you've in smaller can

Drew Houston

lever our team, business businesses important the adding from help like whole talent HelloSign. roadmap M&A adding well, grow accelerating new an Sure, and the adding product to spectrum, across has the been to us

think I worked that's HelloSign well. is of great So a example where

And and a on big distribution advantage. our the So we're always for is these base user lookout opportunities.

content more I a content a that. great Dropbox. far their the in around different where example looking, And think we're of As user is do and as with workflows there HelloSign are of lot helping people

So store more your a us. able being in and access being is and workflows the and to addition eSignature workflows, able for handle document content, to to share natural broadly adjacency

opportunities M&A. So continue for to the and we'll grow through portfolio look

Rishi Jaluria

in HelloSign Okay, saw small signature business terms this bit little that forward? vendor space. specifically give could great. expect competitors it Maybe the talk continuing environment down That's of helpful. maybe ARR you've has just a meaningful about you did can more year. a how that, one how growth a alongside can going How buy demand what us sense path about your in for be? – a been the you you're And HelloSign? thinking And of about to contributor seen you strong And you you digital talk on then HelloSign,

competitive changes HelloSign? about the how any Thanks. maybe you're environment thinking in Just for

Drew Houston

in strong in pandemic the the we're the paid well, revenue accelerated And requests We about adoption really fastest-growing the It's I signature and product saw in Sure, excited HelloSign. of a eSignature think category. seats year. growth company. as last really

with And experience, growth we're so we're we've support – in HelloSign's Dropbox, excited including internationalizing core about, or made investments XX big adding languages. the for Dropbox accelerating more with integration that seamless HelloSign

workflow and for in early and drop better the natural just and of there's document innings, eSignature we it's around specifically general. in cycle number category handling pretty particular, both in document So adjacencies HelloSign, a life see the

they and They're the which go-to-market Dropbox they see of – competitive with. It's a base us scale HelloSign's and as a we of as which really and valuable to really we driven competitors, is to is HelloSign see efficient are And viral similar lot the aspect self-serve. self-serve motion environment, going smaller when as customer scalable. far one making Dropbox big have go-to-market motion. – scale As that's similar folks solution be a a to about advantage time now decisions compared and go by as

Rishi Jaluria

you Thank Wonderful. it. Got so much.


Thank you.

Nichols next with Capital Jack from Markets. Our comes KeyBanc question

Your now line open. is

Jack Nichols

to business follow-up. built about the drive then Can And expectation I the in accounts? a have talk And personal up guys. ability the versus around you sales? of mix Hi,

Drew Houston

update give grew mix a XXXX and consistent. initiative. On revenue I'll and relatively as individual mix in individuals has where with revenue remained pricing teams Plus a an Sure. the individual result mix our teams you the on the basis, of between

teams continue we said, that see course, Of our in progress plan. to

part of As we strategy, teams over long-term XXXX been our is our growing guidance. into teams do this have and XXX,XXX has and now factored all of certainly

Jack Nichols

or customers net way new going expectations higher forward the upselling for think And growth ARPU? Okay, thank plans best you helpful. and about what's guys. the ARR Super to

Tim Regan

specifically way ARR, where think to $X.XXX of passing is on at crossed it billion. but over year I course, specifically this guidance, guidance important we our to our look course, threshold we, maybe in primary an again is revenue of look about think expectations. – billion again, to the I'd guide for the the don't revenue finishing this, and And metric to where best just to in – $X QX, we ARR at, our look

Jack Nichols

Thanks guys.


you. Thank

Our Chrane with comes Research. Bernstein question next from Zane

now line Your open. is

Zane Chrane

a dig little revenue to Hi. more retention net in bit I hoping was rate. on the

an of is I of time XXXX, Analyst in of on Day a for give that update believe, what are customers and value as the the the business XX% believe. Can us business as on I that the you You update at around gave, plan? XX% IPO guys overall well for

Tim Regan


metric do And RR this the teams contribute direction. reminder, levels, do low So in to where shift increase migration paying this update the latest in XXs, users Again, few retention factors now quarterly. plans, focused that and I mix line you increase you at the we point. don't our include know, can guidance a the are revenue a in and tell high revenue the AN premium team to plus trends. factors flows. through ebbs we've net existing drive at some is this driving in as to pricing with a that metric where level, pricing expansion, And positive historical of a worked on and we

Zane Chrane

helpful. That's

of So an it from of side? it's percentage sounds Is like in particular the from it declined that last points kind couple one business to deceleration is due of segment? update Or your expansion a a XX%. churn since uptick

Tim Regan

absent pricing more much back historical we're we've to pricing increase, our with has It levels, changes. and to through where that worked pricing, now do

Zane Chrane

I see.

change that then? pricing So just anniversary effect of the

Tim Regan

That's right.

Zane Chrane

it. Got

materially Has the time last channels. of Okay. had in And I changed last year? through the was over you I thing. one look last self-service that believe K, revenue XX%

Tim Regan

No, that has stayed consistent.

Zane Chrane

much. very Thanks great. Okay,


turn Thanks. would back to This call Drew concludes like the question-and-answer closing I now Houston for session. the remarks. to

Drew Houston

and I everyone see thanks we'll and quarter. your you us. stay really support, next joining safe, appreciate Again, for


Ladies call. for today's concludes this you gentlemen, participating. Thank conference and

You may now disconnect.