Slide 1: Third Quarter 2023 Financial Results
Third Quarter 2023 Financial Results November 2023
Slide 2: Safe Harbor Statement
Safe Harbor Statement This presentation contains forward-looking statements. These statements may relate to, but are not limited to, plans for growth, technological capabilities and new features and products and the long-term financial targets of Dropbox, Inc. (“Dropbox,” “we,” “us,” or similar term
Slide 3: Business Overview
Business Overview 23 Dropbox
Slide 4: Dropbox Today
Dropbox Today Leader in file sync and share Smart workspace for digital content collaboration Addressing individual and team workflows Leveraging virality and scale in go-to-market Balanced growth and cash flow generation model
Slide 5: Global Collaboration Platform at Scale
Global Collaboration Platform at Scale 700M+ Registered Users(1) 18.17M Paying Users(1) 800B+ Pieces of Content(1) (1) As of 9/30/2023 5
Slide 6: Dropbox 2007 vs Dropbox 2023
Dropbox- 2007 Dropbox- 2023 Keeping Files in Sync Keeping Teams In Sync Content Backup Content & User Controls Advanced Sharing Controls & Analytics Collaborative Workflows Professional Delivery Project Management Contract Management Video Editing & Review Cloud & Device Backup Template Libraries AI
Slide 7: Product Portfolio
Product Portfolio Individuals Teams Basic Standard Dropbox Sign Personal Premium Annual Plus Advanced Dropbox Sign API Standard Monthly Subscription Family Enterprise Dropbox Forms Advanced Essentials Business Dropbox Fax Enterprise Business Plus 7
Slide 8: Reinventing the Software Playbook
Reinventing the Software Playbook Traditional Playbook Dropbox Playbook Designed For IT vs. Designed For Users Top-Down Distribution vs. Bottom-Up Adoption Walled Garden vs. Open Ecosystem Rip-And-Replace vs. Live Side-By-Side 8
Slide 9: Efficient Go-to-Market
Efficient Go-to-Market Land Expand Adopt Organically Land Companies Expand Companies Wall-to-Wall Deployment 9
Slide 10: Growth Drivers
Growth Drivers Execute Innovate Convert and Retain New Product Experiences Drive registered users to become paying users of Individual Leverage scale and user insights to enhance existing and Team plans products and drive adoption of new ones Upsell Expand into Workflows Prompt existing users to upg
Slide 11: New Features Help Organize Digital Content
New Features Help Organize Digital Content Dropbox provides streamlined automation tools for organized file systems Managing digital content across work and Introducing features such as: home has grown more complex • Automated Folders & Dashboards • Multi-File Organize • Naming Conventions • Tagging
Slide 12: Video Workflow
Video Workflow Dropbox is developing new product experiences for distributed teams and creatives Capture Replay DocSend An all-in-one visual A video collaboration tool that A video and presentation communication tool that helps makes it easier to collect, sharing platform with team members share the
Slide 13: Dropbox Business
Dropbox Business Tailor team content, collaborate efficiently, and ensure data security Shared team workspace Data governance Advanced security and audit logs alerts & notifications 13
Slide 14: Dropbox Business Teams Expansion
Dropbox Business Teams Expansion Simplified team collaboration invites for shared content ~600K Business Teams(1) ~35% Of Paying Users are Business Teams(1) (1) As of 9/30/2023 14
Slide 15: Dropbox Sign Update
Dropbox Sign Update • Dropbox Sign is continuing to improve offerings for international customers: • Now available in 21 additional languages • Expanded SMS tools to more countries • Established availability to purchase Sign in local currencies (Canadian Dollars, Euro, GB Pound, Japanese Yen and Aus
Slide 16: Dropbox DocSend Update
Dropbox DocSend Update • DocSend empowers professionals with real-time signal on interest in their proposals and deal documents and control of how/if their documents are distributed or downloaded • DocSend Standalone • SKUs: Personal, Standard, Advanced, Enterprise • Audiences: Capital Markets, Fina
Slide 17: Dropbox Replay Update
Dropbox Replay Update • In April 2023, Replay became available as a Freemium offering across all Dropbox Plans and includes 4 free files • It is also available as a paid Add-On for all our paid plans (with the exception of Family plan) with more premium security and collaboration features • Recent f
Slide 18: Dropbox AI File Preview
Dropbox AI File Preview • Dropbox AI for file previews lets users: • Quickly understand large documents or videos without parsing through the entire file. With the click of a button, users can summarize their content, like contracts and meeting recordings, into a concise explanation • Get informatio
Slide 19: Dropbox Dash Update
Dropbox Dash Update • Dropbox Dash - your personal universal search tool that allows you to search all your apps, all your tabs, all in one place • Access the info you need instantly. Search for content across Google Workspace, Microsoft Outlook, Asana, Notion, Salesforce, and more from a single cen
Slide 20: Integrations
Integrations Partner integrations with vendor-neutral software capabilities 20
Slide 21: Environmental, Social, and Governance
Environmental, Social, and Governance Enhancing value through corporate responsibility Environmental Social Governance Dropbox is committed to fighting Our DEI initiatives, workforce We’re committed to maintaining an climate change and reducing our development programs, and ethical independent and d
Slide 22: Financial Highlights
Financial Highlights 23 Dropbox
Slide 23: Financial Highlights
Financial Highlights Predictable and balanced financial model Investing for continued revenue growth Driving strong operating leverage Significant share repurchases 23
Slide 24: Financial Strategy
Financial Strategy Long-term targets 80%-82% 30%-32% ~$964 M Non-GAAP Non-GAAP Free Cash Flow by Gross Margin(1) Operating Margin(1)(2) 2024(1)(3)(4) (1) All descriptions of any future targets in these materials, including, without limitation, on this slide, are described as of August 3, 2023. (2) O
Slide 25: Performance
Performance Strong performance at scale $2,325 81% 82% $2,158 79% $1,914 $764 $708 30% 31% $491 21% 2020 2021 2022 2020 2021 2022 2020 2021 2022 2020 2021 2022 Revenue ($M)(1) Non-GAAP Gross Non-GAAP Operating Free Cash Flow ($M)(1)(3) Margin(1)(2) Margin(1)(2) (1) Graphs presented in this illustrat
Slide 26: Key Metrics
Key Metrics 17.77 $2,514 16.79 $133.73 $134.51 15.48 $128.50 $2,250 $2,022 2020 2021 2022 2020 2021 2022 2020 2021 2022 CC ARR ($M)(1) Paying Users ARPU ($)(1) (MM)(1) (1) Graphs presented in this illustration are not drawn to precise scale relative to each other. 26
Slide 27: Q3'23 Financial Highlights
Q3’23 Financial Highlights Executing against growth and profitability in economic uncertainty $633 $591 $228 $187 32% 36% Q3 22 Q3 23 Q3 22 Q3 23 Revenue ($M)(1) Operating Income Non-GAAP Operating ($M)(1) Income Margin (%)(1) (1) Graphs presented in this illustration are not drawn to precise scale
Slide 28: Operating Leverage
Operating Leverage Structural competitive advantage, scalability, and increased profitability Proprietary Infrastructure Virtual First Workforce Optimization 28
Slide 29: Long-Term Target Model
Long-Term Target Model Non-GAAP 2020 2021 2022 Long-Term Target Gross Margin(1) 79% 81% 82% 80 – 82% R&D expenses as % of 28% 25% 28% 23 – 25% revenue(1) S&M expenses as % of 20% 18% 16% 18 – 20% revenue(1) G&A expenses as % of 10% 8% 7% 8 – 10% revenue(1) Operating Margin(1) 21% 30% 31% 30 – 32% An
Slide 30: Appendix
Appendix 23 Dropbox
Slide 31: Non-GAAP Reconciliation
Non-GAAP Reconciliation Income (loss) from operations - GAAP $ Stock-based compensation Acquisition-related and other expenses Amortization of acquired intangible assets Impairment related to real estate assets Workforce reduction expense Twelve Months Ended Income from operations - Non-GAAP $s Non-
Slide 32: Non-GAAP Reconciliation
Non-GAAP Reconciliation Income from operations - GAAP Stock-based compensation Acquisition-related and other expenses Amortization of acquired intangible assets Impairment related to real estate assets Workforce reduction expense Income from operations - Non-GAAP Non-GAAP operating margin 23 Dropbox
Slide 33: Non-GAAP Reconciliation
Non-GAAP Reconciliation Twelve Months Ended 2020 2021 2022 Net Cash provided by operating activities s 570.8 § 7298 § 797.3 Capital expenditures (80.1) (22.1) (33.8) Free cash flow s 490.7 $ 707.7 $ 763.5 23 Dropbox 33
Slide 34: Non-GAAP Reconciliation
Non-GAAP Reconciliation Gross profit Gross margin Research and development Research and development margin Sales and marketing Sales and marketing margin General and administrative General and administrative margin Impairment related to real estate assets Impairment related to real estate assets Inc
Slide 35: Non-GAAP Reconciliation
Non-GAAP Reconciliation Gross profit Gross margin Research and development Research and development margin Sales and marketing Sales and marketing margin General and administrative General and administrative margin Impairment related to real estate assets Impairment related to real estate assets Inc
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended September 30, 2022 Acquisition- Amortization of Impairment Stock based related and other acquired related to real GAAP. compensation expenses intangible assets estate assets Non-GAAP Gross profit $ 481.3 8 6.4 $ => $ 2.0 Ss] = 8 489.7 Gross margin 81% 1% —
Slide 37: Subscription Plans
Subscription Plans Personal Business Basic Plus Family Professional Essentials Standard Business Standard + Advanced Business Plus Enterprise DocSend Free $11.99 / month $19.99 / month $19.99 / month $22.00 / month $18.00 / user / $24.00 / user / $83 / user / month $30.00 / user / $32.00 / user / Ne
Slide 38: Thank You
Thank You