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SAN FRANCISCO - Dropbox, Inc. (NASDAQ:DBX) reported second-quarter earnings that exceeded analyst expectations, with adjusted earnings per share of $0.71 surpassing the consensus estimate of $0.62 and revenue of $625.7 million beating the expected $617.83 million. The cloud storage company’s shares edged up 0.5% following the announcement.
Despite the earnings beat, Dropbox’s revenue declined 1.4% YoY, or 1.3% on a constant currency basis. The company maintained strong profitability with a GAAP operating margin of 26.9% and a non-GAAP operating margin of 41.5%, both showing significant improvement from the same period last year.
"We delivered a strong quarter in Q2, underscoring the durability of our business and making progress on our key product initiatives," said Drew Houston, Dropbox Co-Founder and Chief Executive Officer. "We’re seeing early signs of stability in our Core FSS business, even at more efficient investment levels."
Dropbox’s paying users totaled 18.13 million, down from 18.22 million a year ago and a decrease of 34,000 quarter-over-quarter. Average revenue per paying user also declined to $138.32 from $139.93 in the same period last year.
The company generated $260.5 million in operating cash flow, up from $230.6 million a year ago, and free cash flow of $258.5 million compared to $224.7 million in the prior year period. Total (EPA:TTEF) annual recurring revenue (ARR) was $2.542 billion, representing a 1.2% decrease from the same period last year.
Dropbox’s AI-powered offering, Dash, is gaining momentum according to management, with stronger customer engagement as users increasingly turn to intelligent tools to improve their work. The company ended the quarter with $954.7 million in cash, cash equivalents, and short-term investments.
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