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Dropbox reported Q2 revenue of $631.5 million, above the $625.6 million consensus and up from $625.7 million a year earlier. Adjusted earnings per share of $0.75 also exceeded the consensus of $0.74. Revenue came in above the company’s own Q2 guidance of $624.0 million–$627.0 million.
The filing attributes the year-over-year revenue increase to favorable currency movements and growth in Individual plans, partly offset by reduced investment in FormSwift, which Dropbox plans to wind down by the end of 2026. Co-CEO Ashraf Alkarmi said the company added 96,000 paying users in the quarter, its third consecutive quarter of growth.
Dropbox’s gross margin remained at 80.2%, while operating margin declined to 26.1% from 26.9%. Diluted earnings per share fell to $0.42 from $0.45, and free cash flow declined to $231.9 million from $258.5 million. The filing says net interest expense rose in the quarter, primarily because its term loan facility was fully drawn.
| Q2 FY2026 | Q2 FY2025 | Change | |
|---|---|---|---|
| Revenue | $631.5 million | $625.7 million | 0.93% |
| Diluted EPS | $0.42 | $0.45 | −6.67% |
| Gross margin | 80.2% | 80.2% | 0.0 percentage points |
| Operating margin | 26.1% | 26.9% | −0.8 percentage points |
| Free cash flow | $231.9 million | $258.5 million | −10.3% |
| Against the consensus | Reported | Consensus | Result |
|---|---|---|---|
| Adjusted EPS | $0.75 | $0.74 | Beat by 1.35% |
| Revenue | $631.5 million | $625.6 million | Beat by 0.94% |
Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.
| Against its own guidance | For | Guided | Reported | Result |
|---|---|---|---|---|
| Revenue | Q2 FY2026 | $624.0 million–$627.0 million | $631.5 million | Above the guide |
What management said on the call
Co-CEO Ashraf Alkarmi said work on pricing, packaging, onboarding and activation improved Teams conversion, while net new annual recurring revenue from Teams grew sequentially. For individual customers, he attributed improved monetization to retention initiatives, payment options and a clearer upgrade experience for users approaching storage limits.
Asked about the Simple plan, Alkarmi said Dropbox introduced it after finding that mobile users wanted a lower-storage option. He also said the company was bringing its services onto a common platform and embedding Dash intelligence directly into Dropbox, rather than treating it as a separate destination. Alkarmi said integrations with ChatGPT and Claude had attracted over 150,000 users, and described customers using them to find and repurpose content before storing it back in Dropbox.
Alkarmi said Dropbox was testing its next-generation smart file-sync-and-share experience with selected customers and remained on track to expand access during 2026. Executive Ross Tennenbaum said the company planned to roll out AI capabilities to the majority of its Teams base during the rest of the year, with monetization to follow usage.
Asked about margins, Tennenbaum said AI adoption would add to costs, while infrastructure efficiency gains could offset some of that pressure. He directed analysts to the company’s 2026 gross-margin guidance rather than a longer-term floor.
On the quarter ahead, Tennenbaum said initiatives across conversion and retention were contributing to user growth, but Dropbox wanted more data before giving more specific growth guidance. He also expected a modest decline in average revenue per user as the wind-down of FormSwift and additions of Simple plan users countered currency and monthly-plan effects. Co-founder Drew Houston said he would become executive chairman after the transition, with Alkarmi becoming sole CEO.
Guidance
At the Q2 call, Dropbox raised its 2026 revenue outlook to $2.513 billion to $2.523 billion and its non-GAAP operating-margin range to 40.0% to 40.5%. Tennenbaum also raised expected unlevered free cash flow to at or above $1.070 billion.
For Q3, Dropbox guided to revenue of $627 million to $630 million and a non-GAAP operating margin of approximately 38.5%. In October, management said it expected both Q3 revenue and adjusted operating margin to meet or exceed its previous guidance.
Dropbox also estimated about $30 million in restructuring cash expenditures, with most payments and substantially all incremental expenses expected in the final quarter of 2026.
| Metric | For | Guide | Previous guide | Change |
|---|---|---|---|---|
| Customers, Paying Users | FY2026 | Dropbox expects positive paying user growth in FY2026. | — | — |
| Capex | FY2026 | $20.0 million–$25.0 million | — | New |
| Free cash flow, Non Gaap Unlevered | FY2026 | $1.1 billion | — | New |
| Operating margin, non-GAAP | FY2026 | 40.0%–40.5% | — | New |
| Gross margin, non-GAAP | FY2026 | 81.5% | — | New |
| Revenue, Constant Currency | FY2026 | $2.5 billion–$2.5 billion | — | New |
| Revenue growth, Excluding Formswift | FY2026 | 0.80% | — | New |
| Revenue | FY2026 | $2.5 billion–$2.5 billion | — | New |
| Operating margin, non-GAAP | Q3 FY2026 | 38.5% | Q2 FY2026: 38.5% | Held |
| Revenue, Constant Currency | Q3 FY2026 | $621.0 million–$624.0 million | Q2 FY2026: $615.0 million–$618.0 million | Raised |
| Revenue, Excluding Formswift | Q3 FY2026 | Dropbox expects roughly flat year-over-year revenue growth excluding FormSwift at the Q3 FY2026 guidance midpoint. | — | — |
| Revenue | Q3 FY2026 | $627.0 million–$630.0 million | Q2 FY2026: $624.0 million–$627.0 million; reported $631.5 million | Held |
| Share repurchases | FY2026 | Dropbox expects to exhaust its remaining share repurchase authorization in FY2026. | — | — |
| Customers, Paying Users Growth | FY2026 | Dropbox expects slightly positive paying-user growth overall in FY2026. | — | — |
| Capex growth, Finance Leases | FY2026 | 4.00% | — | New |
| Free cash flow, Unlevered | FY2026 | $1.1 billion | — | New |
| Revenue, Excluding Formswift Growth | FY2026 | Dropbox expects roughly flat FY2026 revenue growth excluding FormSwift at the midpoint. | — | — |