Dropbox Announces Third Quarter 2026 Results
DROPBOX, INC. (DBX) filed an SEC Form 8-K — Results of Operations and Financial Condition. Dropbox Announces Third Quarter 2026 Results Revenue of $637.3 Million, an increase of 0.5% year-over-year; excluding FormSwift, up 1.0% year-over-year Third Quarter GAAP Operating Margin of 27.5% and Non-GAAP Operating Margin of 42.2% Net Cash Provided by Operating Activities of
How this was made
The 30-second read
Why it matters
The earnings beat and strategic acquisition provide a fresh catalyst for the stock, offering traders a clear entry point.
Market read
First‑report earnings with a strategic acquisition create immediate trading relevance for DBX and its sector.
What to watch
Potential headwinds from slower enterprise spending on AI projects and competition from larger cloud providers.
Third-quarter revenue was $637.3 million, an increase of 0.5% year-over-year; GAAP operating margin was 27.5% and non-GAAP operating margin was 42.2%.
Revenue and Total ARR grew modestly, paying users increased quarter-over-quarter, and non-GAAP operating margin expanded. GAAP net income and operating cash flow were below the prior-year quarter, while the company announced a planned approximately $350.0 million cash acquisition of Tigris Data.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Q3 2026 total revenueGAAP | $637.3M | – | 0.5% |
| Q3 2026 revenue growth excluding FormSwiftother | 1.0% | – | 1.0% |
| Q3 2026 constant currency revenue growth excluding FormSwiftother | 0.2% | – | 0.2% |
| Q3 2026 Total ARRother | $2.56B | – | 0.8% |
| Q3 2026 Total ARR growth excluding FormSwiftother | 1.9% | – | 1.9% |
| Q3 2026 constant currency Total ARR growth excluding FormSwiftother | 0.4% | – | 0.4% |
| Q3 2026 Total ARR on a constant currency basis quarter-over-quarter changeother | decreased $10.4 million | decreased $10.4 million quarter-over-quarter | – |
| Q3 2026 Total ARR excluding FormSwift on a constant currency basis quarter-over-quarter changeother | increased $4.7 million | increased $4.7 million quarter-over-quarter | – |
| Q3 2026 paying usersother | 18.2M | increased by 20,000 quarter-over-quarter | – |
| Q3 2026 average revenue per paying userother | $138.76 | – | – |
| Q3 2026 gross profitGAAP | $513.7M | – | – |
| Q3 2026 GAAP gross marginGAAP | 80.6% | – | – |
| Q3 2026 non-GAAP gross profitnon-GAAP | $521.6M | – | – |
| Q3 2026 non-GAAP gross marginnon-GAAP | 81.8% | – | – |
| Q3 2026 research and development expenseGAAP | $185.4M | – | – |
| Q3 2026 sales and marketing expenseGAAP | $86.6M | – | – |
| Q3 2026 general and administrative expenseGAAP | $66.5M | – | – |
| Q3 2026 total operating expensesGAAP | $338.5M | – | – |
| Q3 2026 income from operationsGAAP | $175.2M | – | – |
| Q3 2026 GAAP operating marginGAAP | 27.5% | – | flat |
| Q3 2026 non-GAAP income from operationsnon-GAAP | $268.8M | – | – |
| Q3 2026 non-GAAP operating marginnon-GAAP | 42.2% | – | – |
| Q3 2026 net incomeGAAP | $116.1M | – | – |
| Q3 2026 non-GAAP net incomenon-GAAP | $197.8M | – | – |
| Q3 2026 diluted net income per share attributable to common stockholdersGAAP | $0.52 | – | – |
| Q3 2026 non-GAAP diluted net income per share attributable to common stockholdersnon-GAAP | $0.88 | – | – |
| Q3 2026 net cash provided by operating activitiesGAAP | $259.2M | – | – |
| Q3 2026 free cash flownon-GAAP | $251.8M | – | – |
| Q3 2026 free cash flow marginnon-GAAP | 39.5% | – | – |
| Q3 2026 unlevered free cash flownon-GAAP | $303.9M | – | – |
| Nine months ended September 30, 2026 revenueGAAP | $1.90B | – | – |
| Nine months ended September 30, 2026 income from operationsGAAP | $512.8M | – | – |
| Nine months ended September 30, 2026 net incomeGAAP | $326.4M | – | – |
| Nine months ended September 30, 2026 non-GAAP net incomenon-GAAP | $548.2M | – | – |
| Nine months ended September 30, 2026 diluted net income per shareGAAP | $1.42 | – | – |
| Nine months ended September 30, 2026 non-GAAP diluted net income per sharenon-GAAP | $2.39 | – | – |
| Nine months ended September 30, 2026 net cash provided by operating activitiesGAAP | $702.2M | – | – |
| Nine months ended September 30, 2026 free cash flownon-GAAP | $690.3M | – | – |
| Nine months ended September 30, 2026 unlevered free cash flownon-GAAP | $823.8M | – | – |
Capital returns
- Common stock repurchases were $150.2 million during the three months ended September 30, 2026, compared to $389.8 million during the three months ended September 30, 2025.
- Common stock repurchases were $847.3 million during the nine months ended September 30, 2026, compared to $1,298.9 million during the nine months ended September 30, 2025.
- Dropbox announced an agreement to acquire Tigris Data Inc. for approximately $350.0 million in cash, subject to customary purchase price adjustments.
What drove it
- Revenue excluding FormSwift grew 1.0% year-over-year, and constant currency revenue excluding FormSwift increased 0.2%.
- Paying users increased by 20,000 quarter-over-quarter, largely due to growth in the Simple plan and slight growth in the Teams plan offset by the wind down of FormSwift.
- Dropbox completed the wind down of FormSwift operations as of the end of the third quarter of 2026.
- On November 5, 2026, Dropbox introduced DBX Agent Cloud, starting with standalone, S3-compatible object storage for companies and developers building AI applications.
- On November 5, 2026, Dropbox launched the new Dropbox experience, which lets customers find, understand, create, and edit content directly in Dropbox.
Concerns
- Total revenue increased 0.5% year-over-year, while average revenue per paying user was $138.76 compared with $139.07.
- GAAP net income was $116.1 million compared with $123.8 million, and net cash provided by operating activities was $259.2 million compared with $302.1 million.
- Interest expense, net was $51.2 million compared with $20.3 million.
- The Tigris Data acquisition remains subject to customary closing conditions and is expected to close in the fourth quarter of 2026.
- The filing identifies risks related to retaining and upgrading paying users, attracting or converting users, competition, product adoption, security breaches, service disruption, and successful integration of Tigris Data.
What to watch
- Performance of revenue growth excluding FormSwift following completion of the FormSwift wind down.
- Paying-user growth and average revenue per paying user.
- The expected fourth-quarter 2026 closing and integration of the approximately $350.0 million cash acquisition of Tigris Data.
- Adoption and expansion of DBX Agent Cloud and the new Dropbox experience.
- Cash generation, interest expense, term-loan obligations, and ongoing common stock repurchases.
Balance sheet and cash flow
- Cash, cash equivalents and short-term investments ended at $1.142 billion.
- Cash and cash equivalents were $1,104.8 million and short-term investments were $37.4 million as of September 30, 2026.
- Convertible senior notes, net, non-current were $691.1 million and term loan, net, non-current was $2,580.2 million as of September 30, 2026.
- Term loan, net, current was $27.1 million as of September 30, 2026.
- Capital expenditures were $7.4 million during the three months ended September 30, 2026, compared to $8.4 million during the three months ended September 30, 2025.
- Cash paid for interest on debt, net of the associated tax benefit, was $52.1 million during the three months ended September 30, 2026, compared to $20.5 million during the three months ended September 30, 2025.
- Net cash used in financing activities was $234.0 million during the three months ended September 30, 2026, compared to $323.6 million during the three months ended September 30, 2025.
Analysis
Dropbox reported $637.3 million of third-quarter revenue, up 0.5% year-over-year. Revenue excluding FormSwift grew 1.0%, while constant currency revenue excluding FormSwift increased 0.2%. Total ARR was $2.555 billion, up 0.8%, and Total ARR excluding FormSwift grew 1.9%. The company completed the wind down of FormSwift operations at the end of the third quarter of 2026, making growth excluding that business central to the underlying demand read.
User metrics were modestly positive. Paying users totaled 18.20 million compared with 18.07 million, and increased by 20,000 quarter-over-quarter. Dropbox attributed the sequential increase largely to growth in its Simple plan and slight growth in its Teams plan, offset by the FormSwift wind down. Average revenue per paying user was $138.76 compared with $139.07, a figure that merits attention alongside the low reported revenue growth rate.
Margins remained high and non-GAAP profitability improved. GAAP gross margin was 80.6% versus 79.8%, while non-GAAP gross margin was 81.8% versus 81.4%. GAAP operating margin was flat at 27.5%, and non-GAAP operating margin was 42.2% versus 41.1%. GAAP net income declined to $116.1 million from $123.8 million, while non-GAAP net income increased to $197.8 million from $196.7 million. Interest expense, net rose to $51.2 million from $20.3 million.
Cash generation declined from the prior-year quarter but remained substantial. Net cash provided by operating activities was $259.2 million compared with $302.1 million, free cash flow was $251.8 million compared with $293.7 million, and unlevered free cash flow was $303.9 million compared with $314.2 million. The company repurchased $150.2 million of common stock during the quarter. Cash, cash equivalents and short-term investments ended at $1.142 billion, while non-current convertible senior notes and non-current term loan balances were $691.1 million and $2,580.2 million, respectively.
The strategic focus is expanding into AI infrastructure. Dropbox introduced DBX Agent Cloud and announced an agreement to acquire Tigris Data for approximately $350.0 million in cash, expected to close in the fourth quarter of 2026 subject to customary closing conditions. The release did not include numerical forward guidance, directing investors to the conference call, webcast, and investor relations website for forward-looking guidance.
Management, verbatim
Q3 was another beat-and-raise quarter, with revenue growth excluding FormSwift and non-GAAP operating margin both ahead of our guidance, marking our fifth consecutive quarter of year-over-year revenue growth excluding FormSwift.
Ashraf Alkarmi, co-Chief Executive Officer of Dropbox
We’re executing on our strategy to become the trusted, independent content foundation for the AI era, and I’m excited about the opportunity in front of us. We’re making our customers’ content smarter and more useful by connecting Dropbox to the AI tools they already use. And with DBX Agent Cloud and our agreement to acquire Tigris, we’re putting the infrastructure we’ve built over nearly two decades to work for companies building AI applications, opening a new avenue for growth.
Ashraf Alkarmi, co-Chief Executive Officer of Dropbox
Not in the filing
stated, not guessed- Numerical forward guidance for revenue, gross margin, operating expenses, tax rate, earnings, cash flow, or any other metric was not included in the filing text.
- Previous-period outlook was not provided, so comparisons of actual results with prior guidance are unavailable.
- Reportable segment revenue and segment profitability were not provided.
- A GAAP or non-GAAP tax rate was not provided.
- Prior-quarter figures were not provided for the reported income statement metrics.
- Dividend information was not provided.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was checked against the filing text, and a metric whose value, prior period and change do not add up is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.
Background
Dropbox's Q3 2026 filing is the first public disclosure of its quarterly performance and the announced acquisition.
Ticker impact
Dropbox disclosed Q3 2026 results with revenue of $637.3M, GAAP margin 27.5%, non‑GAAP margin 42.2% and announced a $350M cash acquisition of Tigris Data.
likely modest upside as the market prices in the earnings beat and acquisition synergies
The numbers exceed guidance, cash flow remains strong, and the acquisition expands the AI‑infrastructure offering, all of which support a bullish short‑term reaction.
Market effects
Strengthens the cloud‑storage and AI‑infrastructure subsector, potentially benefiting peers like Box and Snowflake.
U.S. tech sector may see a modest lift in the afternoon session.
Limited to North American markets; the acquisition signals continued consolidation in the global AI‑storage space.
Counterpoint
The acquisition price may be high relative to Tigris' current revenue, and integration risk could pressure margins.
Key entities
- companyDropbox, Inc.
U.S. cloud‑storage and collaboration platform (NASDAQ: DBX).
- companyTigris Data Inc.
Object‑storage platform targeted at AI applications, target of a $350M cash acquisition.
