Dropbox (DBX) 6 Aug 212021 Q2 Earnings call transcript

Good afternoon, ladies and gentlemen. Thank you for joining Dropbox's Second Quarter 2021 Earnings Conference Call. All participants are in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions.

As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section from Dropbox's website following this call. the Relations. to turn Head Kapoor, now Investor of will call Kern over Dropbox's I Mr. go please Kapoor, ahead.

our March XX, from our the for differ XX-Q will and quarterly particular, free market and Form and were trends, factors, strategy business and to profitability plans, to performance revenue capitalize our and in quarter quarter including and growth, call and These including of income acquisitions, projected by work Form uncertainties overall our strategy prospects, quarter in Today, generate of those the expected known our anticipated our subject risk and that retention and our on XXXX our to to afternoon, or subleasing risk be include and of effectiveness those materially developing opportunities earnings capital result ended implied expected results drive the cash Good welcome future sustain volume expectations our expectations the our and unknown those and in new through ability included other products, timing results, related during and for investments; upgrades call. enhancing our impact features and are shift Dropbox to ability XXXX, repurchases, and business, generate our that ability forward-looking our statements, could to goals user regarding will to in results June offering ability opportunities XX-Q financial opportunities, call. of estimated on financial and earlier. remote including growth, achieving included Statements regarding distributed and Dropbox's risks ended our flow, share described including statements second a financial to impairment positive XXXX. the a this charges our actual that or results, factors allocation our future virtual-first this discuss In expectations as future products model, to M&A cause value. future goals shareholder XX, regarding our work

not should that on no except are this law. of and undertake All beliefs as make future them statements events. based on of predictions as today, statements and You we by on rely update call forward-looking obligation forward-looking assumptions our required as to we

to, in reconciliation in non-GAAP Our discussion furnished non-GAAP the X-K will be measures. isolation supplemental and as release, earnings Relations results be was to website also found our These include which with the be may substitute with and on posted found our or from a of measures Investor materials addition GAAP Form considered may A filed non-GAAP at www.investors.dropbox.com. investor our results. GAAP SEC today financial should in for, in not our

regarding used to Drew? information Officer, investor rate now in guidance assumptions would over Co-Founder found Executive the call Additional like our supplemental in Drew materials. turn exchange the our to Chief be Houston. may and also Dropbox's I

guidance outlook the Today, the Financial for quarter. call will our to and me then Tim Tim our XXXX our product earnings Chief results, with everyone. year. update our good our And on the review Thanks, Kern, from I'll quarter financial QX and is Welcome highlights the of Officer. afternoon, the QX Regan, call. business third and provide share for remainder

these strategy. execute and skilled Board a for Board at who thank our working experience brings transitioning warm Sara Bob welcome Sara like with last global who and I'm Before also has Bradstreet. service strategist week. as transformative newest appointed Sara a member, was our seven operator P&G to decades as our as Board we on years. is Mylod, led off our such over to looking to to begin, brands, growth & I'd to extend I'd we and of like Dun his Mathew, forward last outstanding

unique are for help We we and will excited new had distributed world. the stay policies, be and team. we customers his customers. he providing Board, cash our to another adjust pandemic the our ends, share strong are including driven that after to incredibly operating our quarter in here to mentorship, kick-off, And clear continue as and and their grateful margins To to I'm we by advisor to continue a we companies to through are ongoing it's value long that is the to return-to-work position across a flow to think the believe friend record free work

in differentiated offer strategic year ever particularly Dropbox million a in their quarter. employees, on mobile shared expanding of be non-GAAP economy, customers led our meet for like a of excellent customers, we we've record audiences evolving economy. driven growth an macro And free achieved we've that that have partners $XXX SKU witnessed and of to the and second our in core long in we As and play, their before the their we of margin And priorities on I'd our XXXX, to to results. progress the support cash operating another execution each thank already update to trends an team's new including of professional support become three evolving for larger growth focused strong been quarter. contributions were turning on core the XX% generated freelancer rapid and to in These We continued Dropbox in our and against start operational now half, they with of excellence. highest and platform. and creator and I'll last And flow quarter. proud a for these made solutions business, the driving second we investing business. the quarter in In are our the products in I'm and have QX, improvements a strength needs. by acceleration saw passionate the that several the growth our revenue to our and XX% position force retention,

As collaboration help to areas outperformance topline business make tools under more strategy the the core like on users' I'd second reminder, and content, focused core that this a building functionality, intuitive the strategy highlight few Dropbox of to quarter our help and to the our in contributed a improve seamless and strength is on simple growth. workflows. experience organize drive and

Nearly user Dropbox customer's drives We've area Dropbox. is new powerful our customers, first most is on overall, The upload come to XX% our made our link frequent a overall. button and the generates reliability, from workflows And increase sharing our and continues virally existing mobile, channel. retention new updates and in network improve content, usability one users to speeds our visibility sharing share the QX, experience we sharing our to basic especially link mobile some of half including on which important saw increased to effects. our most recent spreads to in of due faster blue customers of Sharing grow. greater than improvements and base of where for

focused upgrade both those within and are is who key which our also share each on who week monetization. at product receive a by experience, and that recipient improving user users content week [indiscernible] found the send and We rates. another We content higher of driver

activity made closely quarter, and weekly experience we web improvements As on are mobile user continue see we to incremental trend. monitor uptick experiences, to the starting the we both an will sharing a this sharing that result and of in

example to evolving rollout ago, another a As uploads offering, of our the weeks we basic users. of few core announced camera all

the in We devices users Now believe both their their and automatically retention from camera uploads engagement photos further drive basic drive turn mobile backup they Dropbox and to among can and account. continuously conversion. feature will videos our

of are in So these on investments products. core in a offering impact are kinds direct value the our our customers seeing having

our since and improvements in both in app our iOS have highest fact, Android app ratings its store seen XXXX. level rating and We Android reached store

are is investing and our with on users XXX,XXX millions I'll over more the cultivating Moving to in products capabilities our Dropbox focused And workflow we newest business to of of which and our start second comprehensive DocSend. a acquisition, future additional provide suite teams. scaling to where strategy,

get this DocSend closing workflow extend analytics. outcomes. other and business professional year services, our we in purchased to over and more reminder, capabilities DocSend, transactions and particularly financial a With As able important customers visibility to and we control are earlier document in

workflows transaction getting a broader to goals is and made quarter, loop with close goal essentially in the portfolio. Dropbox second into DocSend internal integrating progress the And the the deal start content, that in that on Our finalized. end product originates milestones we and great our exceeded and in

already and are we outbound to working Dropbox DocSend's on successfully DocSend to team to offering, is sales with them educate customers cross-sell Our beginning users. potential

motion. to integrate DocSend working our are we addition, self-serve In go-to-market into

on file impressed great the performance the and control adjacency core looking to Dropbox started is share For ahead. the to existing analytics the This a functionality. they natural with capabilities example, DocSend's I'm reflection users, to Dropbox really I'm forward and we when journey Dropbox a to product's of the team's platform. introduce

Turning to HelloSign.

continue strength the field across anniversaried customers We and requests as COVID especially our surge with impressive user over XX% market, is year-over-year, e-signature which the e-signature grew and see business signature we to particularly adoption. lockdown

this to cater believe opportunity. to in and HelloSign We early product that capabilities innings continues market. of also to international to expand the market we its continued are offerings the

highest regulatory most the qualified secure During approval. and of the meets form also support for of quarter, we electronic trusted the that signatures, Union's launched e-signature European level

business. API to grow continue the HelloSign expand also We and

found our investments increased their clean prioritize fact, capabilities users adoption. clear, our and growing further we company continues retention, making scores to HelloSign and be to user building expansion fastest unified to they that we synergies API workflows of one of average to plan users. and HelloSign areas brand continue awareness drive In the satisfaction than and and higher have as customer for

big investing to are us. workflow breadth that for new in versus depth Zoom marketplace products through and Another highlight way partner of app Dropbox excited that cultivate was Expanding future the for and is our the Zoom. opportunity ecosystem app Spaces we our a to featured is scale I'm our in partnerships. seamless

new app While our in point Dropbox surface new stages, users we a links over and joint expect time. provide the and for that that an will exciting Zoom early the entry is we

organic specific this just to beyond a successful we of files. that across our range we example, many workflows believe And one different comprehensive I'd ecosystems effectively work Beyond to wide of products. like a Transfer, finally, that more on experience can touch captures create

to for continue sent cultivate a needs see different various also it's scale user options is specific our while of its new base. pricing of innings, certainly ongoing of we experiment are And potential. fit Transfer We and early week to with across our good every example packaging price to thousands user and at products efforts hundreds Transfer excited points. and

our users. we and DocSend of products ecosystem investing core more show Our partnerships markets, in our expanding new even and remain by decisions. our future ourselves to adjacent go-to-solution By HelloSign, overall of platform of on and workflow investments strategy third our deliver the being are our as in building how we into operational value disciplined to and categories technical are for efficiency, of the investment a positioning and improving reliability all finally, distributed and focused our thoughtful while And we security Dropbox infrastructure driving on in excellence products.

margin For be continues to to helping infrastructure innovative infrastructure the continues improvements. Dropbox at our be team example, gross of leading-edge technology. in us forefront drive

to efficiency by share lower impacting power proud storage centers our XXX% renewable our Our XX% electricity. also our that SMR Shingled our moving Magnetic capacity account capacity by team increase now covered over drives and centers all of allows made cost without data storage our footprint. or and storage locations. adopting progress of week increasing us also to is We overall server data server storage now density significant Recording, we this SMR were in has for to are which our

warming making we been footprint and last a last carbon carbon announced good In a XXXX our reminder, global part footprint our stack fight than consumption tangible power and a their energy of goals reduced cost data gross commitment As as Overall, the the that progress. sustainability and our is and team as better and demonstrated we year to hard margins nearly and for XX%, reduce on industry year, center work complex our we've half, is we've the in strong lower is innovating tech resulting average. savings highly are by in QX. our our effectiveness XX% usage maintaining by

Tim I'll of to our metrics we the most success. now against that back second it And to to as turn us our As we firmly see half fund results. will to we business this that, record are are and ensuring by disciplined the thoughtfully we goals. look executing profitability over in can walk committed into reinvesting the to quarter, long-term year, up strategic financial our with priorities financial And to second you for remain through set long-term our

Drew. Thank you,

for to begin operate headed. before, As we as I've provides a strategy the this and financial I reminder we of done are outlines want with context where how the our business

We we balancing ranging share the generate with on our performance in repurchases. collectively by to continue margins in between execution this financials committed ultimately to billion this these trajectory. financial XX%, returning to that updated for manner, the disciplined flow and long-term to cash free continue objectives. against that XXXX. profitability will in thoughtful, deliver to to believe annual value shareholders shareholders for growth that line these and way we capital talk reduce $X We concurrently form and and quarter a guidance progress generate demonstrated we in Today, to focus of our share aim for our By XX% and to operating remain our operating count while decisions year against make objectives of the making I'll

to turn revenue quarterly to first second $XXX increased quarter our $XXX Let's to our $XXX beating of XX.X% million. million, results. range million for guidance year-over-year the Total

On rates XX.X% grew grew provided to billion. million tailwind year-over-year. for year-over-year a ARR a and growth. Total exchange sequentially of Foreign ARR quarter the XX.X% basis, total for $XX constant two-point currency a $X.XXX

ARR acquired XX.XX paying in improve customers to quarter continued reflects plans, attract We to Our retention. new premium users growth with to our users, strategy the our and exited million drive second products in QX. driven per by revenue in the was part net new paying users of adoption Average paying $XXX.XX in users paying our XXX,XXX Family continued the quarter, plan. approximately added introduce and user

go-to-market quarter. in I P&L, our Before like momentum turn I'd the highlight of to the to some

meaningful with of our XX% our to reminder, to self-serve from a results. can As lead engine our any revenue derived optimizations motion, over self-serve

capabilities, freelancers fuel external our sharing who we our trends As require pro with Pro in have and adoption SKU. the we his the to functionality are work additional what small designed with for remarks, XXX premium to prepared files order in positive been Drew in the SKU or seeing is storage mentioned it advanced gigabytes businesses transfer recently professional to individual of call to and the SKU. seeing additional including momentum up clients, ability we

process. significant This with starting in the a plus we upsell quarter, as trials offering number This began prompt professional drove a part users trial. the of uplift checkout of pro

in revenue days length engineering year-over-year XX% to efficient, extended help the an of with the find by we commensurate These these to XX pro trial customers potential who right match to times, addition, trial SKU more to types conversions. optimizations period leading drive the right to way. professional of the a growth ability number XX%. our In from in to improve to enhancements, products at of users ways more give growth Through time a in than lift continue XX continued the our the to teams right a the users trial days the our number understand scalable benefits with of increase Raising the in of resulted started product.

force. with our to P&L, real that unless continue impairments certain note discussion assets statement otherwise related mentioned income and our in indicated, are and like would we exclude stock-based amortization non-GAAP reduction Before all expenses, our further expenses of compensation, I of of purchased acquisition-related estate intangibles, measures to

income also excludes aforementioned equity effect income losses included net the non-GAAP and Our investments tax net on and the gains adjustments. of

real also strategy. on Let brief update me a provide our estate

year, real Francisco two subleasing to Austin, headquarters our to Australia. and mentioned, and of decost estate we additional footprint. have subleases existing Last our subleases significant transition a facilities signed portfolio recently related we signed to Seattle steps in model As San our we Virtual-First includes by a previously our portion

multiple We are fronts to seeing we progress our in execute on ability on and remained confident strategy. our

P&L efforts. points increase the quarter, improvement basis. XX% a result storage result lower our positioned as for shift well from continue home the in the more categories we transition ensure continued we associated to success. did changes Related in data is we we've personnel infrastructure are in are to the in charges that, our hardware to X of total benefit investing discipline The write-down note Gross in well to and in this to we've at primarily are assets expense not of first from that these the employees margin we in real $XXX made future representing charges In Virtual-First, data quarter in margin I our aforementioned the year As with are we million result our impairment. we from depreciation to as and order being efficiencies the seeing making expecting reduction progress to and operating to locations. centers continue of strategic P&L. to additional headcount with over stemming restructured cash continue growth rollout on a any business and our working With the the our continued estimated business million ultimately to remain facilities efficiently an still continued costs. workforce totals in the the our and $XXX an to associated the migrating across we up as from levels. our of personnel, said, hiring a our plan a these this benefit of impairment we as as already in managed the result, charges flows That of subleased Related short, across well as a estimate facilities cost record around we of gross operate while generate leases. impairment a greater while let's invest improvements with as inclusive from percentage all taken, do course reduced estate was to across accelerate year this internally we year-over-year of concerted second substantial that quarter for to and areas

quarter. G&A quarter R&D in X% from million compared tax million or quarter which XX% in which second earned million in XXXX. second Second Net the second the to and certain was the million we expense for income quarter second $XX In $XXX million second reserves compared million, a XX% XX Diluted weighted share an operating per the for XX% over of quarter, was quarter of of benefited was $X.XX was marketing XXXX. $X.XX the second of of expenses profit second which of XX% revenue quarter Sales decreased $XX the quarter of operating release of total, $XXX XXXX. of in of margin a decreased record revenue, the XX% point of compared G&A revenue, second average revenue, one-time is diluted of on to outstanding, to represents in or of the quarter revenue of the to the which XXXX. improvement XXXX. XXXX. of or share XX% or revenue an which decreased compared expense based non-income a expense $XXX per from was quarter XX% XXX record improvement EPS up percentage shares

to was the $XX on also a Cash added quarter. record our $XXX million quarter. second to the of update to on to flow. compared the an In QX center in We short-term XXXX. quarterly repurchase million balance expenditures second for $X.XXX flow activity. also of operations during million finance $XXX billion. data This in $XXX leases in share I'd provide our lines quarter and equipment. quarter, cash with our million we of and flow like cash cash million free resulted investments $X Capital the cash were from Moving ended

under share year, only but mentioned, repurchase shares. not have XX our million. capital last previously million now In million intend share also leverage repurchasing Since our we $XXX of repurchased to approximately return program shareholders, to our the to program, X.X As nearly spending spent to we count. I $X QX, reduce billion shares, start we

share our addition, weighted In share aim reduce current remaining average count. diluted under to continue have $XXX repurchase our as we we approximately million still to authorization

efficient continue our strength capital sheet the of believe utilizing shareholders. and to for that guidance is back QX that, and deliver for We the we our to turn our to full-year. leverage share let's will for to returns repurchases balance With

this expect of For quarter at XXXX, assumed approximately average in guidance guidance X to be on $XXX range for $XXX are of revenue recent account historical Currency of the third million midpoint million. and a points of the exchange the we to combination rates of growth rates. in and based

range operating expect to non-GAAP to XX% the in margin We XX.X%. be of

be Finally, XX-day average shares based weighted we XXX the of share million diluted to XXX average on range outstanding expect in to our shares trailing price.

this $X.XXX at range, the points account are exchange guidance billion and billion combination we guidance For of full-year XXXX, which of and on guidance rates was $X.XXX $X.XXX recent for to billion billion. are to growth $X.XXX of midpoint our assumed revenue previously rates. the raising based to approximately Currency X average in a historical

our for of the are We approximately maintaining margin full-year. XX% gross guide

range non-GAAP to raising previously which in operating to XX%. XX.X% be of guidance are We XX% the our margin range, was to XX%

holdback approximately We HelloSign our previously and our our to of range, million guidance to payments XXXX of of in of in of to comprised severance flow million our includes $XXX related are cash to reduction $XX a be free $XX cash This acquisition million $XX million million range million. one-time with related the deal to outflows $XXX was installments in consideration $XXX $XXX force. million which raising

$XX million We $XX million to be continue for the to to expect of in improvement net allowances. range capital expenditures tenant of XXXX

We X% continue approximately to in of lease our lines revenue finance additions to expect XXXX. to be

additional context for Finally, XX% as we momentum are be to year-over-year full-year we the average across diluted To outstanding are to share guidance from our we XX% this we shares our maintaining weighted in on guidance, raising seeing for million XXX XXXX the business. to of are revenue the range account shares. XXX growth some million expectation approximately

future note efficient structure. in while I'd given in are and operating We under marketing disciplined revenue raising drive the to expectations hire year. to that we guidance, invest continue to to an raise the our plan increasingly and margin the growth initiatives operating half in of back cost concurrently

raising and continue guidance flow consistent metrics and plan these We year, our while SKUs, we of what cash confidence the best expect decision with therefore, some paying variability With large made rates. free users the at from continued regard as adoption impact simultaneously to ARPU aforementioned the the driving level indicator we mentioned ARR our and the outperformance, cost FX away Family of health start user business I paying are to growth with savings of through pursuit favorable and ASPs, focus in of the other of on of in the to deals business. low of our concurrently long-term shift the we continue to as the

to Lastly, on I long-term targets. want some our thoughts share

are we to important Therefore, support outperforming high year inorganic margin consider our add magnitude this new this operating our It's points ways our by track and in year $XXX year-over-year. take more offerings. profitability, initiatives now ROI we sizeable now expected improve to to XX%, this are range, hire growth. to product outstanding, growth profitability to invest our while to free revenue of equally forward are to we every on capabilities driving that explore development, to sustainable we on with plan grow on to within than focused XX% to target and a approximately long-term is and growth operating flow step expect year X don't expected million expectations margins We to progress cash while

future as this In rates we start turn into traveling as year FX in again years headwinds tailwinds could fluctuate. addition, or certain

XX% goals have half goal at great Given progress our first and these of billion. maintaining conclusion, year. to time, this XXXX targets of In margin we of the are $X considerations XX% this made cash long-term our our flow against we over operating free

We remain continue to we achieve targets. objectives our financial and against to our long-term execute on course

we ensure continued turn continue operate With that, remarks. closing to way back measured are success. to I'll his now Looking a long-term we the business it ahead, disciplined Drew that in for to positioning and will with

Q&A. us. all to Dropbox incredibly customers second and our evolving as work. them the today. remain for XXXX goals technologies financial excited our ahead against to We our thank look go-to-solution I'm that, well for Tim, long-term help work results, the positioned the further priorities, environment. And for is I'm rapidly I'd strategic and Operator? solidifying proud with us to you believe open our our on joining continue as of adapt position you, about up of and Thank focused the opportunity that for executing quarter like distributed I call

Thank comes you. Brent with Jefferies. [Operator Thill first Instructions] Our question from

line Your open. now is

for is you and Brent This Hi. first the for great Luv a Thill. Sodha questions taking quarter. on one congrats my Drew, Thank for on was you.

like head of and of half sort COVID we the with began, saw As back when still us in variants into the some you of COVID guys the these of XXXX we the first uplift see – of top metrics. funnel

these the right do future half variants kind of funnel back So and we how you top there us, still of of now? what of are and of you some work the with head the see terms out in year, into as we the seeing envision

Sure. Thanks for the question.

we the our reopening company. level, terms that offices high thinking about our every concerned certainly alongside a think at through of variant mean, mean, and I we're – Delta in So I

of moving as world office. time more pretty an that out large impact spend a big tailwind of it's of more we far the as of As the time be to last clear think much screen work out starting business, distributed long on – a we'll the in planet a year, run. than working our percentage will the And more

work of it. mode this have of And support tools and to generation new a so new need we we hybrid

the the to does complicated. continue saw as We're it what after in we But nature of there like we of because the during So pandemic, same I all do last think think and – had things think time, year is rethink far a need is going in before that pandemic. our in the the customers lot Delta it it's opportunity a make during our surge something I of makes numbers, in the fundamental are as stability a be to some Dropbox of will demand terms And huge opportunity environment pandemic and hybrid work. of inflections to we using bigger. kind onset variant will that the the COVID. At

– for So a but and way big in needs the long as run, as this tools of us. far we working new think new opportunity it's

And that. to Luv, add maybe just briefly

be in And their well. DocSend business. top well are to And the we're both HelloSign year-over-year. Pro seeing seeing funnel. potential to than are opportunities. stability about growing traction do also Certainly our more continues SKU and with and then across and XX% excited of strength seeing retention. plan We continues the we're up Family

a well. overall, things going So lot of

Got professional you the more driving that what I this follow-up as drove Thank noted. Is strength? quick more you. One guess, give kind to upgrading? color what's into some Any that could you of SKU creatives more it. strength insight on this?

Sure. start. I can

we So because forward year, of other always or tailwind the a lot have freelance creatives coincident acceleration of the like a rise been also have audiences with in And Dropbox for COVID macro that’s passionate in of last users. seeing trends us been the these the pulling economy.

focused been them – We segments driver big professionals like And as those. their grown evolve. to on our will and supporting continue SKU needs of has focus a we're XX% very year-over-year on they've customer been

the to pro made Yes. starting then XX% I'd plus trial quarter, users and process, And my from I our we XX pro. extended led some started pro This of changes also the uplift days, optimize to in go-to-market our offering ties checkout best we motion trial. we've that. in mentioned a to with which our that of to align our plan self-serve to to number onboarding days better as users XX workflows a continue Where for this we the customers remarks, them. back to add suits to to potential

Great. I'll it Thank you. pass to.

next Rishi And our Thank you. question with RBC. from comes Jaluria

Your open. is line now

Hey, guys. much taking Nice I for Thanks here. so see questions. solid Growth questions. stabilized two kind had a of to quarter. my

trends COVID a on the a for And First, where on then us up volumes time? that maybe help we elevated revenue, I picking been HelloSign? follow-up. of after the wanted you transactions for saw I'm those see on us are but breakout could give HelloSign? to lapping even HelloSign a asking remain monetization that understand on a continue I've tailwinds to just sense rates monetization Can year-ago. got Great to start directionally, monetization the for HelloSign. curve over And if not Have we you

for sustained massive it's to HelloSign workflows businesses. of lot mean, especially I pen and with in pulled I say then has growth customers a and see been start. HelloSign our can been our a we've the They we shift and great self-serve there from this I to small would paper being for need start forward HelloSign as a fully Sure. that surge do beneficiary way I to far base. think user was started. as as and great be and the to we're distributed a have lockdown big easy e-signature mean, as early fit HelloSign a way, found in innings

And better we the to attaching so in continue invest HelloSign Dropbox products. to

we a you that the easy have that’s a as so And could as more so And so last a clicks and with there's And is signature big out In possible there a there to with and make integrations product envisioning regard. launched Professional really bring that other you in first broadly, Dropbox opportunity. first number where that number we're quarter. takes we QX, and things SKU, it of improvements lot contract doing in are want of growth, few HelloSign, HelloSign of together. Dropbox if HelloSign’s sending we those have our for international a bundle been it then with we've

languages. XX we year new last in So introduced HelloSign

investing earlier, around in big different it's The been world. the EU, qualified all the my the drive regulatory a with in we've said I environments to unlock there. signatures As of remarks compliance

see So globally. innings we as that penetration overall SMBs far e-signature with it's and the early as

hands? the kind going What actual the customer helpful. kind then into for that Dropbox That's about profile think talked And it. sense sort to you to sense a are of do DocSend, it us their to into you the starting makes Thanks. Dropbox how of you're cross-sell give customers. try motion what Got Can ideal and you get Okay. is? users to sell it DocSend outbound existing

as and then and raising But services, then have sharing you're controls features DocSend rich if strong like particularly sending data where financial things and rooms. Sure. role entrepreneurs folks like who out richer also segments We really see in need you money, any DocSend what customize to sales it's recipients broadly, overall great experience, model. with a engaging is you see fit fit your and And for a that marketing collateral, want really want deck with and or are our then to that. you more great

workflow start markets where in each So where back – comments We're or for DocSend this our friction it DocSend, they very a a my this HelloSign on where the it possible. we to for all of minute is and in of And the making of big focused removing a out Dropbox, and have than is individually the it's really experience, saved some they because as signature Dropbox. is Dropbox bigger think out parts. HelloSign self-serve send addition finish And what really out contract customers be say more send in seamless need this seamless it model. on with they ago, the we I'd from a all or HelloSign, contract even viral of from something think dovetails opportunities, that save through whole will completed to feedback think collectively it We being send with revisions these some complimentary. the

All right. you. Wonderful. Thank

Thank you.

with Our comes next question Murphy Mark from JPMorgan.

is open. line Your

currently? to plan congrats just comments Thank any proposition tailwind seems Yes. I'm to much the ARR my value that Family Family through just of a on us on first, walk could wondering, add the growth you very solid resonating. instance is have you. results. plan if providing if you how for And I’ll be the

numbers. was Tim speak customers. the start I to Well Sure. following can I can and our

a single their Dropbox that offering to and make up an have make So that opportunity to family, and have of subscriptions family billing point we seamless. folks a that and of more wanted to package to to space, saw entire but or kind whole

someone revenue in their themselves just subscriber for And been extent so incremental certainly that now is otherwise it bringing maybe have the subscriptions and who a would to drives whole family.

of with So better that's and use customers were a want them cases to just our experience. we pretty all straightforward, building And following our share have but families. where we a lot things

of the the of this plan of a our on Family Family practices users contributing in the visible driving such contribution factor It our user we landing paying don't activities. page quarter. part to certainly experience strength to photos the to addition our our help our onboarding potential benefits Sure. plan as fuel past the optimistic as users to of was Mark, expansion ARR. breakout made And its we've more as the in momentum. the communal other Family engaged user and the are plan in about growth, of retention vacation sharing to And we

and saying period. just changes you And the understood. pro guess to trial Okay, you manifested describing that, clarification, trials, a you promoting or that suppose to tangible QX? have the I started that early the in it already globally, in manifested becomes extending and something I trial were end that's Tim, the would Are more then and the the if that our at QX of QX period? see more in of that conversions quarter

point, in we'll quarter, in your future continue started It second but see this the manifest to Sure. quarters. to

Thank you.

Thank you.

Enders question next from Steve with Our KeyBanc. comes

open. is line Your

Hey This Jack is Steve. on guys. for

you the the price I are questions. thinking potential full across, guys line? in How about environment increases Just two product guess quick

tools That our approach XXXX prices of added and the Sure. to this with said, SKU And raised infrequently. on had sufficient have in Yes. increase. example, when XXXX. value raise toolkit lever in – we've price where the And we is prices our of Pricing we success warrants for only plus added in is to one past. we've certainly our

we users. So engineering making and on to sure point, are at features this serve capabilities that adding great our efforts our focused are

customers despite for increases guidance. appropriate continue time. an against free or is that this increases, price factor a monetization And assess seen option strategies us big we'll are again, us to the drive various in [indiscernible] will price paid not So base. at XXXX to we've our our in But stay with user

Yes, that's really helpful. Thanks. Okay.

forward? Second is, cross-sell are in and then investments product set question how about going you driving the thinking

sharing, improvements Sure. lot improvements in just opportunity Well, last keeping experience, packaging development, all platforms. are the of in product of core terms we've talking and in at our we track it making of all we're streamlining of but our we different these things to of our invest with been Dropbox in and of good product all the more a about customers at a in continuing – of that, of to like in look terms kinds across we and And experience, have example looking of quarter investments simpler see when in pricing all a challenges lot – our of cloud lot we have that. frankly, our – broadly, stuff challenges terms a

also have Dropbox and job we different different SaaS a your of great tools us in files, ecosystems. care but stuff these think have all most does I of all taking these of

your I grow is it. the huge content second so big and new to And there of for for opportunity all and engine evolve making files turning a that product our is, Dropbox business in your a and to And core into syncing there's cross-sell cloud all then think organizing products. continuing we're also to from so investments portfolio

both continue of we'll organically is M&A. and new added through a businesses some fastest and These products – DocSend great we launch our to are recently, HelloSign example. So growing both

margin add the programs to certainly see We And our Maybe can that. plans this year. half back year the in of guidance. the you in the half hire and only thing back the I'd marketing in to spend of have on

So invest our both can are products. ways to continue we in

Thank guys. you, helpful. Super

question Instructions] And from Thank comes Battle you. [Operator our Research. from Rose Road Ben last

Your is open. line now

Thank you Yes. a I questions. much. very have few

plan sort of around users know you're finding when adopters number of to the have more Firstly, now recent curious million, around to just I'm start coming think being that XXX if for with, registered some you registered the paying versus users perhaps free users about been from of time.

get paid driven certainly free been and both a I'll to user, businesses existing start. path stable. cohorts pretty being So user certainly the predictable. very that's the and from We We are users a by – new

Okay.

and base just I add massive million registered a And user is the install – that. would XXX Certainly, asset to for us. I'd

in Transfer, like in things of experimenting so investing have and potential through also driving accelerate having we drive the a the Dropbox packaging broader levers then of that and on bundling base. addition a core to subscription, with free we're products, and and pricing And to in bunch further monetization portfolio

know over with year, if coming curious work to work may, new the the potential early the hiring terms of how course And of on in your your measures rehiring to virtual own last plans new of and you've and hires? Drew, focus your this that I all resonating year. Interesting. efforts, is taken with folks virtual in I'm begin environment or of type your

one of benefits resonating lot. I with being all work able mean, comes anywhere. home the from we've from work It's I or think the a to flexibility is enjoyed that

talent new And and us. unlocked patent so pools for that's

might So demand recruiting every have a I had areas And a think seeing, we flavor not presence. we've in of flexibility. hybrid lot of employees navigate you're where physical success had company as their

that at tools new world. it new also tailwind I’m folks is to a and build this I and And big that to week the were the – office it then for provides of Virtual-First the the flexibility think to a so forefront. think our beyond with in provides recruiting. you model fact days up typical for sort And I this work experience two resonates show – design we trying have

So the model overall, tailwind for be it's for big not everyone, been but or a recruiting. – might our it's been

to with this Ben, the strategy, U.S. half the New of York first I our outside of that half in main this only year, the strategy. are of our that to having hubs Seattle. accelerating Francisco, shift our San thing success is cost we were and Virtual-First where hiring would hires add location In also roughly lower at new it's the

as if out over a year. some as – real last you’ve the Tim, improvement margins. for very for made It SMR on sound Drew, next looks being much room cost does Thank locations And progress look that of you question you've margin? over like part to also, the think lower Okay. the Do then for storage centers. months further we it you deployment for and mentioned gross of XX as you. well, you improve gross data there's

Sure. Yes.

model, our does margin that already, doing job. the range outstanding XX%. our for And are at again now, long-term which end to is infrastructure that maintaining we that an of is guidance top target Our gross demonstrate progress team XX% But we're of making. XXXX target for

have being we XXXX, by going level very in that's CapEx replaced more forward. consistent However, cycles of did a low refresh

in will depreciation this lead increase to an year. So that

increase early to target our too us now. for So right

Okay. Thank very you much.

CEO Thank I'd like no Mr. you. the Drew showing Houston, I'm Co-Founder. At further questions. this to and to call hand time, over back

thank Well, see quarter. again today. for right. you, your you and next everyone joining All We appreciate continued support

thank gentlemen, and Ladies participation. for you your

Everyone, a have wonderful disconnect. You may now day.