Dropbox, Inc.

On the infrastructure side, we continued investing in backend improvements aimed at strengthening the usability and security of our platform. This quarter, improvements to our desktop sync engine reduced startup times for large accounts, and we continue to drive higher adoption of important security features like multi-factor authentication with new prompts and Teams admin controls. Within the individual's business, we continue to see good traction with our simple plan, which is our low-price entry-level plan designed for mobile-first customers. Across our document workflow business, we continue to invest in DocSend, and we've improved document upload flows, processing speeds, and simplified sharing and permissions. These improvements are resonating with customers as DocSend continues to grow at a double-digit pace year over year. As mentioned previously, we remain focused on operating both sign and form switch for maximum profitability, and both of these business lines continue to perform well against its objective. In closing, we're pleased with the progress we've made on our two key objectives in the first half of this year. Our Dash offering continues to improve, and we're seeing positive early signals with key engagement metrics. While we continue to optimize our outbound sales motion and improve our onboarding flows, we have a strong roadmap in place to unlock product-led adoption of Dash that will accelerate the adoption among our customers. I'll now turn the call over to Tim to share a recap of our second quarter financial performance as well as our updated flow year outlook.

Thank you, Drew.

I'll cover our financial highlights from Q2 and then provide guidance for the third quarter and the full year 2025. We executed well in the quarter, with results coming in ahead of guidance and operating margin meaningfully exceeding our expectations. This performance reflects our continued commitment to driving efficiency within our core file sync and share and document workflow business, as well as the stability of the core business, which gives us the opportunity to invest in future growth opportunities. With that context in mind, let's turn to our Q2 financial performance. Starting with revenue, where we are managing through expected -over-year revenue headwinds related to our strategic decisions to scale back our form-swept business and to reduce the number of outbound sellers supporting our revenue. This is the first quarter of our core file sync and share business. In Q2, total revenue declined .4% -over-year to $626 million. Constant currency revenue declined .3% -over-year to $626 million. Excluding the impact of form-swept, which acted as a 140 basis point headwind to revenue, our -over-year revenue growth would have been flat. Total ARR was $2.542 billion, down .2% -over-year, and .1% on a constant currency basis. Form-swept acted as a 160 basis point headwind to ARR in the quarter. We exited the quarter with 18.13 million paying users, a sequential decline of approximately 34,000 paying users. This quarter's decline in paying users was primarily driven by our reduced level of investment in form-swept. Excluding the impact of form-swept, paying users would have grown nominally in the quarter. The outperformance relative to our paying user expectations was primarily driven by our individual SKUs aided by retention gains stemming from improvements to our cancellation flows. Our simple plan also contributed modestly. Average revenue per paying user was $138.32, as compared to $139.26 in the prior quarter. ARR approved decline sequentially, primarily due to the impact of form-swept, as well as the continued rollout of our simple plan. Before we continue with further discussion of our P&L, I would like to note that unless otherwise indicated, all income statement figures mentioned are non-GAAP and exclude stock-based compensation, amortization of purchase intangibles, certain acquisition-related expenses, net gains and losses on our real estate assets, workforce reduction expenses, and net losses on equity investments. Our non-GAAP net income also includes the income tax effect of the aforementioned adjustments.