Dropbox Earnings Reach $0.88 per Share, Beating Third-Quarter Estimates
Key Facts
Dropbox reported results on November 5 for the third quarter ended September 30, 2026, posting non-GAAP diluted earnings per share of $0.88, beating analysts’ estimate of $0.73 by $0.15. Revenue also came in above expectations, at $637.3 million versus an average estimate of $629.72 million, according to Investing.com. But revenue grew 0.5% year over year, according to the company’s filing, putting the beat in the context of limited business expansion. Paying users totaled 18.20 million, compared with 18.07 million a year earlier. The results thus combined beats on market estimates for earnings and revenue with modest growth in core revenue and subscribers.
Revenue was $637.3 million, up 0.5% year over year, according to Dropbox’s filing. Excluding FormSwift, revenue growth rose to 1.0%, while growth was 0.2% on a constant-currency basis after excluding FormSwift. These comparisons show revenue performance with the effect of the excluded business and currency movements in measurement set aside. Annual recurring revenue was $2.555 billion, up 0.8% from the comparable period. Growth in this metric rose to 1.9% excluding FormSwift, the company said.
Paying users reached 18.20 million, an increase of 20,000 sequentially, compared with 18.07 million in the third quarter of the prior year. The sequential increase in the second quarter of 2026 was larger, with the company adding 96,000 paying users, according to that quarter’s results. Revenue per paying user was $138.76, compared with $139.07 in the third quarter of 2025. The metrics show that the increase in users coincided with a decline in average revenue per user from the year-earlier period. On October 28, the company said it expected its preliminary third-quarter results to fall within or exceed its guidance for revenue, constant-currency revenue and non-GAAP operating margin.
GAAP operating margin was 27.5%, unchanged from a year earlier, according to the company’s filing. Non-GAAP operating margin rose to 42.2% from 41.1% in the third quarter of 2025. GAAP net income was $116.1 million, compared with $123.8 million a year earlier. By contrast, non-GAAP net income was $197.8 million, versus $196.7 million in the comparable period. The different measures show diverging trends in net income, with the GAAP measure declining and the adjusted measure rising year over year.
Cash generated from operating activities was $259.2 million, compared with $302.1 million in the third quarter of the prior year. Unlevered free cash flow reached $303.9 million, versus $314.2 million a year earlier, the company said. Sequentially, Dropbox’s revenue in the second quarter of 2026 was $631.5 million, with year-over-year growth of 0.9%. The company said that quarter it had added 96,000 paying users, compared with an increase of 20,000 in the third quarter. Comparing the quarters provides context for the slower sequential increase in users alongside limited annual revenue growth in the third quarter.
Dropbox shares closed at $36.1 on November 4, according to EL7 data, ahead of the results announcement the following day. On November 5, they closed at $35.76, according to the same data. On November 5, the company also announced the launch of DBX Agent Cloud, infrastructure for businesses and developers building AI applications. The business will start with standalone S3-compatible object storage, according to the company’s filing. The announcement placed the launch among the developments Dropbox disclosed on the day it reported third-quarter results.
Dropbox announced an agreement to acquire Tigris Data for about $350 million in cash, with the deal expected to close in the fourth quarter of 2026, subject to customary closing conditions. The deal announcement came alongside the launch of DBX Agent Cloud, which the company described as an infrastructure business for AI applications. The company set the fourth quarter of 2026 as the expected closing period; the acquisition had not closed when the agreement was announced. The operating results Dropbox reported the same day included year-over-year revenue growth of 0.5%, or 1.0% excluding FormSwift. These measures, together with paying-user numbers and average revenue per user, remain central to assessing the company’s performance for the quarter.