Dropbox, Inc.

Good afternoon, ladies and gentlemen. Thank you for joining Dropbox Third Quarter 2024 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation, there will be an opportunity to ask questions. To ask a question during the session, you will need to press star 11 on your telephone. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Dropbox's website following this call. I will now turn it over to Peter Stabler, Head of Investor Relations.

Thank you. Good afternoon, and welcome to Dropbox's third quarter 2024 earnings call. Before we get started, I'd like to remind you that our remarks today will include forward-looking statements, such as our financial guidance and expectations, including our long-term objectives and forecasts for our fourth quarter fiscal year 2024 fiscal year 2025, and our expectations regarding our revenue growth, profitability, operating margin, and pre-cash flow, as well as our expectations regarding our business, assets, products, strategies, technology, employees, users, demand, and the macroeconomic environment. These statements are subject to risks and uncertainties that could cause actual results to differ materially. They are also based on assumptions as of today. and we undertake no obligation to update them as a result of new information or future events. Factors and risks that could cause our actual results to differ materially from these forward-looking statements are set forth in today's earnings release and in our quarterly report on Form 10-Q filed with the SEC. We'll also discuss non-GAAP financial measures, which are not prepared in accordance with generally accepted accounting principles A reconciliation of GAAP and non-GAAP results is provided in our earnings release and on our website at investors.dropbox.com. I will now turn the call over to Dropbox's co-founder and CEO, Drew Houston.

Thanks, Peter, and good afternoon, everyone. Welcome to our Q3 2024 earnings call, and I'm here with Tim Regan, our CFO. I'll cover our recent business updates and strategy, and then Tim will walk through our Q3 results and our outlook. Last week, we announced a 20% reduction in our workforce. This was an incredibly difficult decision and I want to acknowledge all the folks at Dropbox who were impacted. But it was a necessary step to position for our next chapter. As we've discussed over the last year, we're at an inflection point as a company. Our core FSS business has matured and we've been investing in new products to solve new problems and drive growth. But given the challenging environment for our core business, we needed to better align our investments with the opportunities ahead. Beyond the headcount reduction, we also simplified our org structure. We'd become too complex and layered over time, which was slowing us down and hurting our execution. So we designed a flatter and more balanced organization, reducing the number of layers while better aligning our teams around our key priorities. Now let's talk about where we're headed. Over our first 17 years, We built a large and profitable business, helping hundreds of millions of users secure, organize, and share their files. But today's workplace has evolved dramatically. Content is now scattered across dozens of cloud tools and browser tabs, not just files and folders. We're all struggling with the same core problem I started Dropbox to solve, which is spending too much time searching for stuff and trying to stay on top of our work. And the challenges go beyond just finding things. There's no persistent way to organize your cloud content because when you close your browser, your workspace and all your tabs disappear. There's no common way to collect and share different kinds of cloud content across platforms. And for IT teams, the shift to distributed work and the resulting proliferation of tools has created even bigger headaches around security and around governance. The good news is that AI gives us powerful new tools to address these universal problems. That's why we've been hard at work on Dropbox Dash, our AI-powered universal search product. After launching an initial version for individuals last year, we just released Dash for Business in October. The business version of Dash combines AI-powered universal search and organization with universal content access controls and governance for IT. We're focusing our initial sales efforts on our over 500,000 FSS Teams customers who already trust us with their content. It's early days, but the initial feedback has been really encouraging, both among our existing Dropbox FSS customers and prospects that are new to Dropbox. Dash helps you instantly find anything across all your work tools from a single search box. It uses AI to summarize and answer questions about your company's content, and it gives you a personalized start page that connects your meetings, your docs, and your projects. But what's really resonating with IT leaders is Dash's unique governance capabilities, which we call Protect and Control. For the first time, admins get real-time visibility into everything that's shared in the company across every major content platform from one dashboard, with powerful controls to protect sensitive content. Most companies we talk to are doing this manually today, so they've told us they see huge value in automating this and extending these capabilities. And overall, we know this market is attracting significant attention and investment, which both validates the opportunity we've been pursuing, while also underscoring the importance of moving quickly to capture it. So as we reposition the company around Dash, we're evolving our FSS business to maintain its strengths while accelerating Dash's adoption. And rather than trying to re-inflect FSS growth, we're shifting our focus to product quality, to retention and efficiency, and serving as a springboard for Dash. This means doubling down on our strengths, being the simple and reliable and platform-agnostic solution that our customers love. And teams remain a priority given the higher ARPU, lifetime value, retention profile, and strong cross-sell potential for Dash. And given that our FSS users also have unmet needs around finding and organizing their cloud content, we see a significant opportunity to bring some of Dash's capabilities to our core FSS product while also turning our massive FSS user base into a natural growth engine for Dash. We're also reassessing our document workflow investments. We'll continue developing DocSend features like virtual data rooms while focusing sign on retention. But FormSwift, which we acquired to expand our capabilities requires significant investment that we now believe is better spent on Dash. So we're exploring strategic options there, including a potential sale. Looking ahead, we're still in the early days of AI transforming work. While we're focused on Dash near term, we're also exploring adjacent opportunities too, like our recent acquisition of Reclaim, which brings AI-powered calendar and time optimization capabilities. And over time, we see potential for a broad suite of AI tools that make knowledge work more productive and will leverage our massive user base, our trusted brand, and our technical infrastructure to accelerate adoption. But to fully capture this opportunity, we have to stay focused and prioritize. Our core business gives us a powerful foundation to build on. And while it will take time to change our growth trajectory, our conviction continues to grow as we solve real customer problems. Evolving from syncing your files to organizing and securing all your cloud content is a natural evolution for Dropbox, and we're well positioned to win in this new market. I'll now hand it over to Tim to cover our results in Outlook.