Dropbox, Inc.

Ladies and gentlemen, thank you for standing by and welcome to the first quarter 2020 Dropbox Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. It is now my pleasure to introduce Head of Investor Relations, Darin Yip.

Thank you. Good afternoon, and welcome to Dropbox's first quarter 2020 earnings call. Today, Dropbox will discuss the quarterly financial results that were distributed earlier. Statements on this call include forward-looking statements, including the potential impact of the COVID-19 pandemic and related public health responses on our business, financial results and the economy, statements relating to the expected performance of our business, future financial results including expectations regarding future profitability and our ability to generate and sustain positive free cash flow, our ability to extend our platform by developing new products or features, our strategy as well as the ability of our key employees to execute on our strategy, long-term growth and overall future prospects. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. In particular, those described in our risk factors included in our Form 10-K for the year ended December 31, 2019 and the risk factors that will be included in our Form 10-Q for the quarter ended March 31, 2020. We should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today, and we undertake no obligation to update them except as required by law. Our discussion today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of our GAAP to non-GAAP results may be found in our earnings release, which was furnished with our Form 8K filed today with the SEC and may also be found in the supplemental investor materials posted on our investor relations website at investors.dropbox.com. I would now like to turn the call over to Dropbox's co-founder and Chief Executive Officer, Drew Houston. Drew?

Thanks, Darren. Good afternoon, everyone, and welcome to our Q1 earnings call. Thank you for taking the time to join us today, especially under the current circumstances. On the call with me is Ajay Vashi, our Chief Financial Officer. Olivia Nadebaum, our Chief Operating Officer, will also join us during Q&A. The three of us are dialing in remotely from our homes, so please forgive us for any sound quality issues or background noise over the next hour. Today, I'll provide an update on the top of funnel and engagement trends we're seeing as a result of COVID-19 and talk to business and product highlights from the last quarter. Ajay will review our Q1 financial results, touch on our go-to-market strategy, and provide guidance for Q2 and fiscal 2020. First, I want to provide some perspective on how the team here at Dropbox is responding to COVID-19. I'm really proud of how quickly our employees have adapted to working effectively in this challenging environment. We continue to hold regular company-wide town hall meetings across our global offices and productivity has remained high even as the vast majority of us have shifted to working remotely while reorienting our product roadmap to adapt to emerging customer demand. In addition, our infrastructure teams have been hard at work to ensure we continue to operate without any service interruptions or issues and are able to support higher utilization during this time. I want to thank the team for staying focused on serving our customers and continuing to provide them with the tools they need to get work done. In times like these, the ability for teams to easily access and work together on content takes on an even greater significance. We launched the new Dropbox last year to address unmet needs around distributed teamwork and collaboration. It's a smart workspace to organize users' content, connect their tools, and bring teams together, helping users stay in sync and reducing the friction of working remotely. We believe the accelerated transition to remote work that's underway will have lasting effects that will favor companies like ours in the long run and create added demand for our products. And we're starting to see that in our top of funnel metrics. Over the last few months, we've seen an increase in free trial starts across both our team and individual plans. Since mid-March, Daily Dropbox Business Team Trials increased by approximately 40% over pre-COVID levels at the outset of the year, with higher levels of engagement and collaborative activity. Similarly, Daily Trial Starts to our PLUS individual plan increased over 25% over these same periods. We'll be closely monitoring these newer cohorts for conversion trends and business contribution in the coming weeks and months. In addition to the higher demand we've seen in our top of funnel, We've also seen increased adoption of our new desktop app. Now available to all users, early adoption of our new desktop app has grown to over 350,000 of our over 450,000 Dropbox business teams. And over the past couple of months, weekly active users on the new desktop app has increased by approximately 60%. We've also seen significantly higher usage of HelloSign in recent months. and with the number of signature requests up three times from average levels across January and February. And Hello Works, our fully customizable document workflow solution, has seen an uptick in new COVID-19 related use cases. Lenders have leveraged the product to send out tens of thousands of small business loan relief applications and a New York-based urgent care facility relied on Hello Works to process nearly 2,000 patient intake forms in April alone. Increased interest in Dropbox has also come from higher education institutions that have shifted to a remote learning model. Demand for our products from universities is increasing, and professors are using Dropbox paper as a tool to make educational content more accessible and collaborative for students. In Q1, we also launched a program to donate free Dropbox licenses to NGOs battling COVID-19, as well as K-12 teachers. And we're continuing to support our local hospitals and medical professionals on the frontlines. We want to do everything we can to help critical efforts like these. Turning to our quarterly results, in Q1 we continued to see strength across our business. Revenue grew 19% year-over-year on a constant currency basis, driven by paying user growth and ARPU expansion. We also achieved record operating margins and reached GAAP profitability for the first time. These results underscore the strength of our global collaboration platform our efficient go-to-market strategy, and our operational discipline. Let's move on to some of the product highlights from the quarter. We're always focused on building a great experience for our users. This quarter, we added notable features to our deep integration with Zoom, allowing users to do even more without ever leaving Dropbox. Now, users can record a Zoom meeting and save it, along with a transcript, directly to Dropbox. From there, they can securely share the transcript and recording with team members and keep them in the loop when they can't make it to a meeting. And since transcript files are indexed using our full text search feature, they'll show up when users search for any phrase mentioned during a video conference. Given that many of our collective users are now working remotely, this has proven to be a timely product release. Heading into April, we saw a 20 times increase in usage of our Zoom integration compared to February levels. This quarter, we also launched a number of improvements to the admin experience. Empowering IT is an important focus area for us as we drive adoption of Dropbox within business teams. In the Q1, we introduced an updated insights dashboard. This refreshed dashboard, part of the Dropbox business admin console, enables IT to easily review user activity and take relevant action as needed. The new dashboard allows admins to see which outside domains their team is sharing with and how often. generate out-of-gallant stats on paid license utilization, pending invites, active members, and suspended members, and monitor sharing activity for compliance. In Q1, we also launched new admin and security features into HelloSign Enterprise. Customers to this SKU can now streamline multi-team management with centralized visibility and delegation controls, providing oversight over documents, templates, branding, and usage. These capabilities empower IT to stay in control as utilization scales. Enterprise features like these have already helped HelloSign land one of its largest deals to date. We're excited to announce that another leading on-demand services platform joined a growing number of delivery companies, including Instacart, who are leveraging HelloSign. The customer will deploy HelloSign Enterprise Plus to create a faster and more seamless onboarding experience for restaurants and will drive improved eSignature workflows across several business functions. Together, our new Dropbox Business Insights dashboard and the advanced admin and security features we introduced for HelloSign helped to streamline the admin experience as teams scaled their deployments to Dropbox. In addition to improving our native admin functionality, we've been investing in key partnerships to bring Dropbox Business Teams tools to manage and secure our best-of-breed SaaS environment. Our advanced Team and Content Controls add-on, launched in partnership with BetterCloud, empowers IT admins with even greater control over data protection, Holtzman, and Eric Schubach. In Q1, we closed nine outbound deals where the advanced team and content controls add-on was cited as a key differentiator. This included a Dropbox Enterprise win to displace a competitor at a physician group with over 5,000 employees across 200 locations specializing in emergency medicine and acute care. With our advanced team and content controls add-on, Dropbox addressed the customer's need for a HIPAA-compliant tool to enable collaboration among a highly distributed workforce. To wrap things up, Q1 was a strong quarter for us amidst a rapidly shifting global environment. The record trial volumes and customer engagement trends have been encouraging, but we remain cognizant that there are likely headwinds ahead for the broader economy. At Dropbox, we remain committed to our customers and will continue to focus on enhancing the capabilities of our products to facilitate distributed and remote work. Our efforts to improve the experience for IT admins will help teams efficiently and securely expand their deployments, and our latest integrations and partnerships help our users bring all their different tools together so that they can focus on their work wherever they may be. I'll now turn it over to Ajay, our CFO, to walk through our financial results.