Dropbox (DBX) Q3 2026 Earnings Report

The call was positive overall, supported by a Q3 beat and raise, continued paying-user growth, strong margins and free cash flow, growing AI adoption, and the launch of DBX Agent Cloud. However, revenue and ARR growth remained modest, ARPU and operating cash flow declined, Q4 growth is expected to be limited, 2027 revenue is currently expected to be roughly flat excluding Tigris, and the new initiatives remain early.

For Q4 26, Dropbox expects total revenue to be in the range of $630 million to $633 million, with FormSwift contributing no revenue compared to approximately $3 million in Q3; excluding FormSwift, Q4 guidance implies 0.2% year-over-year growth at the midpoint, with a currency tailwind of approximately $3 million, and on a constant currency basis total revenue is expected to be in the range of $627 million to $630 million. Non-GAAP operating margin is expected to be approximately 40%, including a partial quarter's benefit from the reduction in force and excluding approximately $22.5 million of workforce reduction expenses, and diluted weighted average shares outstanding are expected to be in the range of 224 million to 229 million shares. For the full year 2026, revenue is expected to be in the range of $2.528 billion to $2.531 billion, implying 120 basis points of year-over-year growth at the midpoint excluding FormSwift, with a currency tailwind of approximately $28 million; on a constant currency basis, revenue is expected to be in the range of $2.5 billion to $2.503 billion. Gross margin is expected to be approximately 81.5%, non-GAAP operating margin 40.5%, unlevered free cash flow at or above $1.075 billion, CapEx in the range of $20 million to $25 million, additions to finance lease lines approximately 4% of revenue, and diluted weighted average shares outstanding in the range of 228 million to 233 million shares; the company continues to expect positive net new paying user growth for 2026, approximately $30 million in severance and benefits, with roughly $20 million expected to be achieved in 2026 and the remainder to be paid in 2027, and some quarter-to-quarter variability in gross margin as rollout and adoption progress. Excluding the acquisition of Tigris, Dropbox expects 2027 revenue to be roughly flat, approximately 150 basis points of operating margin expansion, and unlevered free cash flow to expand in line with operating margin; formal guidance, including for Tigris, will be provided in February, and the company expects the acquisition to close in Q4 26.