Dropbox (DBX) 4 May 232023 Q1 Earnings call transcript

Good afternoon, ladies and gentlemen, and thank you for joining Drug Box's First Quarter 2023 Earnings Conference Call. [Operator Instructions] 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 the call over to Karan Kapoor, Head of Investor Relations for Dropbox. Mr. Kapoor, please go ahead.

you. Thank welcome quarter and earnings Dropbox's to afternoon, XXXX first call. Good

financial demand, to get forward-looking that our second including quarter started, for we year and remind long-term statements, and as objectives our the our products, I'd as and include expectations our regarding environment. business, assets, XXXX regarding profitability, Before margin as our will like revenue and our you and forecast expectations and well operating technology, industry employees, users, strategies, today growth, macroeconomic our expectations such fiscal free trends guidance remarks cash flow, our

These update statements They cause are risks as new of them undertake of future uncertainties materially. actual on based that we assumptions as a result are could subject or to also today, information differ to results events. obligation to and and no

risks materially differ the also in our prepared Factors investors.dropbox.com. filed Accepted Form results cause in our results release at discuss set from earnings on provided XX-K these could of annual release reconciliation and actual forth in accordance are and statements is and We'll in are on GAAP and not today's our which Principles. to that report SEC. forward-looking A Generally our Accounting website with earnings financial measures, non-GAAP with non-GAAP

to I to Dropbox's call Drew like the would Co-Founder now Officer. over turn Drew? and Chief Houston. Executive

Welcome everyone. earnings XXXX QX good call. our and to Karan, afternoon, Thanks,

Joining me today Regan, is Tim Officer. Financial Chief our

the quarter, financial outlook highlights product our second the results, remainder and the and and for our the Tim guidance quarter business our for from share first of provide will then I'll review QX year. update

outperformance and individual exiting a some plan during late of a to the results, performance as reduce beat around we as moment. to FormSwift, led I'm all our how mind across announcement metrics, QX our discuss last for workforce. our I in sign-ups with week by It's pleased better recognize we in QX We environment. and guidance overall, far in challenging financial But revenue which in performed that top acquired I many, quarter. our

continued plans DocSend our also their due own team's flip the Dropbox continued our softness our to in Sign businesses. side, face we saw ongoing in On businesses respective markets. customers weakness their moderation And and we saw pressure across a as in

Over and also increasing showed that the facing. we've headwinds last several noted promise our not period, we're potential evaluated recognize downturn to months, less investments this some we've during customers that our which have business immune before today. carefully units are And different the that macro the

for accepting well some during normalization And natural demand following pandemic yet of Part is more huge get in the done, existing used the see opportunity of time, for work as business. customers maturation acceleration to same this that improve our at we AI-powered our our building a tools to and shortly. as detail FSS are the new technology discuss I'll which the products

added at shift I'm forefront forefront era, And and while we to determined AI Dropbox new the innovating mobile the to of our skill this these long-term with need couple and investments better resources years last that the initiatives. AI stage product align development over to Dropbox, we've for ensure at are that to talent sets bring growth as of of early up is just free to cloud. we the the

long-term all grateful And contributions company. our really by to tough for the shifts decision, health so our colleagues, reduce of while workforce it's to painful goodbye but to our necessary these was Dropbox. approximately to their And to I'm This XX%. many unfortunately, us say required of a

In conjunction we've updated this objectives. with our announcement, streamlined also strategic and

some to months. their the users many automation able few I'm completely discover made cloud we've transforming content. to over the cloud to and help content our to work accelerate experiences for AI, product intelligence believe next We investing our share expect and in is recent objective and we've in years vision. and and knowledge excited been we're first features centered easily. to The And with AI-powered potential organize progress organizing more for advancements around AI here building search and what on machine

Second, for we're workflows together Sign team, documents And evolving FormSwift specifically around consolidated and more drive this product and FSS which our integrated our core a to videos. will and address experience core believe our Dropbox with DocSend, customers. we seamless we shift, experience businesses customers' our with

foundational by our remain we focused a execution operational product driving efficiency, objective improving on as lastly, excellence And their velocity. our and

quarter first this two we're on I'll each backdrop, objectives. on past So share updates that what for some working touch with and our for of

working with capabilities and content lives. in improving organize AI investing customers' our cloud to Starting all

now to heard your desktop of have now web-based hard talk browser What about on be folders calls the You've the of your what from on evolution be moving And files to one apps. using across see to workloads their your a and knowledge is me previous We fragmented XXX XXX for XX huge used used and opportunity repositories icons searching, search platforms browser. tags content become and and growing and to content believe organizing cloud workflows face a boxes. audience here. when drive all and challenges multiple large workers search start to

offers an bar on content. ML we've Search all and AI why cloud Universal powered for that That's one been your working solution

first and excited step of I'm Command Universal Search and important AI-powered an that this share coming in week, group was in a to functionality, product wait building share to with select acquisition testing in began we Our customers first of can't the our just E more XXXX this months.

the can lot seen our generative and others how like Universal and ChatGPT tools AI way over AI We've how a have imaginations ML Search new people's captured last their open the eyes improve all one just possibilities. customers work. months to of is application few and of

on can these AI with about We One you personalization. your you us, at AI important an knows building interact personalized access that a your about thing that language natural storing scale want AI clear information know can't and lot our already data company of tools is millions our about need servers. of is that have when using course, the you and their build when easier all becomes that using for to without knows personalized most content, people

So users to like products existing want benefit of and AI-enabled can stand trust service they Dropbox believe experiences they will that AI a we this, that from responsibly. strongly that use

market uniquely of Dropbox growing could and anyone products lead and I these here. positioned The for types than believe capabilities faster have is is imagined, to

as apply ML and we've techniques to invested and our working AI functionality, improve others. to can improve organizing years, same and all of principles that integrates image brand on and ensuring with AI lives. work we're of tools, and many rely to seamlessly For can customers privacy in a search our our and us responsibly. we customers' content infrastructure, our using the trusted the our customers' security now their And recognition And technologies committed

we're workflows AI-powered as increasing AI-powered the this evolving leverage the capabilities into second and we the computing. Search around new customers' product, our experience and era our strengths FSS launch documents seamlessly increasing build lean we'll urgency of level we're objective, address foundational existing out And videos. user to of around also Universal Dropbox of which velocity new is as product our with just additional And our

quarter, make onboarding sign-ins There Dropbox ultimately One are of with And we're taking the I try, had about of Tap a in we our to to products, steps here Google QX, family rollout number sign-ups of talked the foundational that friction use. reduce tangible buy to easier and our important results expectations. process. Last and exceeding in

and our can manage by of the We've product. shared experience mobile, we their continue pain to access user reliability improvements made who customer a and improve across usability the of for retention desktop, provide And making easier sharing to more improving web to points and to around take it forms steps identified users consistent many content.

some in the Dropbox upload which reliability around to made customers. and performance enhancements We're also observed pressure changes our exiting making of the address stable we've We the also improvement downsell plus app, teams drove quarter. increased mobile with the retention

initiatives self-serve on identified by Teams sales counts, employment our drive weigh of our outsourced customers to higher customers opportunity while leveraging retention among teams And and difficult cost-cutting our for user many we've an support. trends

some self-serve some optimistic seen that motion touch this to an customers. will we've higher the our pressures with efficient mitigate of way We're of teams sales-assisted be retention

which workflow and operate now for our improve customers. our order our in increase to teams within our businesses, execution alignment deliver core holistic experience vision to across to Moving more a

internationally. to on see its fundraising the its growth continues moderate into diversifying as as ongoing sales DocSend working such challenges in services actively well and and as verticals, we're and professional new environment,

our making We're friction removing Dropbox. progress for DocSend users also in on

we've example, among of increase Dropbox eliminated for terms service seen trial users. encouraging with For multiple gates, DocSend starts healthy we a in and results

our with citing e-signature. developer continued win moderate Dropbox Sign against with Dropbox customizable our offering to we've see API more also Despite competitors. that, a the in platform higher rates growth to backdrop Sign than better experience, continues customers challenging

align business the Dropbox as And outlook, Sign integration towards we to deeper products. we're shifting with with and Dropbox our investment towards many API the core our rightsize areas of growth

We and FormSwift, well tablets to also our small forms businesses continue of gain users traction individuals. our editing FSS which see of as among potential online of Sign an synergy capabilities, acquisition library and and for PDF Dropbox as core which recent provides

marketing Dropbox past And already working from FormSwift drive to campaigns taking ASP. pages FormSwift its and exceeded traffic branded expectations the quickly the already and first integration, our as in on teams our Dropbox, early full part with associated are of users SEM results. We've quarter And on to launched learnings encouraging acquisitions.

and to edit workflow wherever see products, this efforts to are. our production and collaborate Replay, push a to off video for integrations allows teams this deeper starting start to we'll with product simultaneously integration strong finally, later on rebranding I'm which video video projects year. moving they And to and pleased continue

editing work, faster distributed tools. avoiding with teams time creative more era Replay media and this and stay helped connected review their switching deliver and projects In has between many efficiently of professionals by

many created video subscription. This engaged users we I'm last Dropbox in-house experience core we it available and FSS that the for made launched of Dropbox available that fall. with to use caters for Replay made We the now second availability with the tool that Dropbox to highly after we've premium all for collaboration launched excited add-on into to features work. a to Replay creators who connect last fit all an general is Dropbox users natural Capture as announce see week,

helps we in and meetings grow users. teams tools benefits users a quarter-over-quarter, Dropbox across saw prospective is e-mails offer and viral stay retention and communication and adoption content. that see In sync Dropbox Capture and driving to material and long existing training avoiding while to significantly both educational effects continue excited again Dropbox network present Capture its we're video QX,

number these and AI And while never success. making The long-term finally arrived, Dropbox In a excited know of been us. about the of changes closing, I we've ahead easy this remains company. the are days of macro era computing I environment we're best for personally are set haven't up started been challenging, our to building believe what and I has I since transitions

rewarding to It's road act. be our leadership been map on innovating so in hands our really next product developing on foundation while alongside team. our We're strengthening a

strong a work I'm millions with as recognizing and all a organize can brand their content, of their secure have way their ultimately cloud excited as trust we about the they organize with lives. our content We working and hundreds users to platform transform most customers of Dropbox forward path

Tim. that, it to with And pass on I'll

Thank Drew. you,

XXXX, provide I'll for our all some Drew last XXXX QX as as environment QX and restructuring, the for highlights of discussed. guidance context financial which Today, well on for the outlook update within week's and walk financial our an and current through macro targets an

$XXX our guidance with year-over-year the for beating revenue first million. range of X.X% increased million, quarter our Total start $XXX I'll to $XXX to million results. first quarter

approximate million with rates an exchange headwind line guidance. previous $XX growth, Foreign our provided in to

to improving year-over-year. to well On our our XX.X% grew quarter. $XX FormSwift by a for driven and revenue year-over-year, as a a individual XX.X% we pricing guidance in year-over-year, grew basis, ARR by million by sequentially constant Total currency teams ARR was and June. The last packaging plans plans quarter basis, some an $X.XXX announced that total X.X% outperformance constant trends and the our revenue primarily from for currency of FormSwift billion. exiting grew driven this changes upside On as

higher and as increase $XXX.XX, QX We June QX by over net added XXXX. Average another million we exited new for an as to announced The Teams the prices, XXX,XXX paying of customers paying users per user full quarter users quarter quarter at with revenue FormSwift approximately $X of revenue. of was which paying a well compared driven sequentially. renewing XX.X last

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

of net the the income includes effect income tax adjustments. aforementioned Our also non-GAAP

steps our we to real strategy, model. a been a Moving to as estate to taking our virtual-first estate transition portfolio of have where real our result de-cost

actively the quarter impairment In did incurred considered the of Francisco first not $XXX and quarter, remaining additional any we our incur seek charges continued in San to headquarters. buyouts with date subleases to impairment cumulative at our We million.

current corporate the assumption into that not subleases maintained our estate will next Francisco we in the enter have in few Given additional years. real market, San we

a as a of within higher driven more physical With that, the let's was margin representing gross improvement year-over-year P&L. space, greater point quarter with storage of on data revenue. percentage by in same the an Gross which for one mix primarily a depreciation XX% quarter, basis. was increase first continue store of in margin The resulted density the can our percentage lower that

XX.X%, approximate XX point by headwind mostly point from nearly XX Operating and margin points percentage an headwind a was driven from two basis FX down year-over-year basis FormSwift.

by operating by R&D due our X year-over-year million, about were points XXXX. exceeded $XXX margin mainly driven in XX% hiring increased up to guidance approximately expenses revenue costs. and workforce We lower-than-expected Operating outperformance our

organizing adding mentioned, intelligence Drew as growth artificial machine longer-term early-stage in around invest we leveraging learning. As been leaders our engineers cloud in and content, product initiatives we've all

due addition, expenses with advertising year-over-year In FormSwift. operating higher expenses to our increased associated

EPS on the million versus offset first was $X.XX on average quarter the diluted quarter shares XXX weighted increase. based $X.XX average shares million, share XXXX expenses diluted from based million per for weighted first operating income Net share of per XXX up higher as up the for quarter revenue of Diluted first most X% outstanding, outstanding XXXX. of $XXX was the

$X million our ended and We cash $X.X Capital cash the in to with $XXX to balance flow. quarter. first and resulted expenditures billion. in quarter. million operations $XXX quarter was flow from on QX the during of $XXX million XXXX. the of in million flow were cash Cash short-term cash free compared This of Moving quarterly investments

finance center also quarter, leases our for equipment. we the In added to million $XX data

Let's billion that In approximately a $X.X X spending million continued million. turn by was approved activity. in executing repurchasing to our repurchase authorization we XXXX QX, shares, against share $XXX

an quarter, second As of will for the $XXX the update we to our quarter and current some the end first thinking guidance. remaining behind XXXX have guidance, to provide I'd approximately authorization. this of on share the full like the million guidance also now under I our provide context year where

range the a to basis, For million On revenue second we million $XXX of of XXXX, million. quarter revenue expect we in million. to $XXX of range $XXX currency revenue to be the in expect constant the to $XXX be

in We currency a of to second over to XXX are quarter translates the approximately a $XX point growth. million assuming headwind headwind basis which

to severance in margin margin operating million to approximately to guidance expect We by XX.X%. expect we $XX excludes This in pay to non-GAAP related the be approximately force reduction QX. employees benefits and a impacted

of points basis of forms. points from headwind from XXX a FX includes roughly basis This headwind XX also and

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

since strengthening to For our U.S. full update, the of revenue guidance down $X.XXX are $X.XXX our the $X.XXX year by last of the $X due as our range billion. from billion million the billion revising billion to to $X.XXX range previous we dollar reported

$X.XXX we basis, revenue constant on are billion prior range However, currency guidance billion. a maintaining $X.XXX of to our

half. point full the million with estimated of to in Now approximately year headwinds moderating XXX $XX significantly FX approximately the headwinds or currency XXXX headwind growth basis second

our gross expect is to XX% XX%, to prior margin of XX%. to XX.X% from guidance approximately which We be up

from guidance operating and XX%. severance up pay XX excludes as XX This headwind to basis of also well from our aforementioned in approximately acquisition. basis approximate expect approximately between we XX%, to an non-GAAP the to XX% expect headwind This be as We prior of from QX. is benefits FormSwift our margin an point inclusive FX point

guidance of of Command our outflows to cash the and DocSend of in acquisition-related E. to This range our revising We million. million of $XXX installments and for deal to down million cash $XXX consideration from the approximately flow free million previous cash $XXX for $XXX million the includes midpoint XXXX $XX million outflows by $XX range are narrowing guidance holdback

severance $XX initial force. reduction consistent our Onetime our to an approximately related a in million And headwind of of payments approximate result guidance, includes million with $XX this as legislation. tax R&D

to related our we our As capital maintaining are expenditures, guidance. prior

approximately expect be the X% cash of and XXXX. for to continue We to to CapEx be finance additions to million leases to of range $XX in our $XX million in revenue

average previous outstanding million reflects count XXX we our shares shares share share our XXX our to Finally, program. This down shares. to anticipated weighted the million XXXX million range of of to XXX impact range reduction to be of million an in XXX expect diluted repurchase our guidance commitment in from

Here's this some context on additional guidance.

and teams Let The all identify inefficient to restructuring as targeted macroeconomic towards is and largely intent distinct me and are decisions, first category our some reductions facing reductions Sync our thus towards were higher marketing as growth. potential investments areas spend of our mature Share areas against then business future R&D competitive sales to elaborate on rotate lines and buy and where and well supporting pressures. address of our that

QX improving revenue more maintaining our with changes We these marketing areas. be our and FormSwift the exiting across well our some as plans spend these also In trends quarter. to we from as to same constant largely revenue, in saw efficient We as for XXXX. stemming light intend related guidance individual of in currency are outperformance

of combined trends, and Conversely, from on restructuring of we customers despite and us result reduced levels our as of outperformance. leading are our well impact headwinds weighing to Sign. see full as a as guidance year with maintain DocSend continue first headcount the our teams investments stemming opposing macro the billings marketing our to potential These both quarter

margins, XX% to to raising XXX as by compared in up we related XX%, our As reduction from savings to over are basis operating operating to guidance points driven store. prior margin the guidance, net midpoint our our approximately at

we our cloud Drew existing growth their to organizing also mentioned, are restructuring while investing initiatives As long-term be business lines content. will around all in increase we efficiency,

will this savings development, early-stage into factored the hiring talent by of AI skilled some product Thus, and offset which been has in guidance. be

flow at estimate. As reduced this related million a expectations flow, free cash $XX to midpoint. factors are full year few we to There by leading free our are cash lowering the

we cash restructuring largely offset a in from First, benefit bonus timing derive severance time, will will which our while and over XXXX savings next benefit payment is the events payments the of by year. savings, be

may our revenue an above, Additionally, of given more our as reduced restructuring, investments, of and of in have as impact opposed to cash headcount see we billings this on which would a year. our as impact to marketing result second half mentioned the XXXX pronounced levels a

Lastly, gross annual since and $X this rates million $X Which to guidance margins incorporates XX% free billion of margins our guidance. cash our XX% delivering an of brings by financial deterioration XX% exchange initial targets long-term to of XX%, foreign XXXX. to of approximately in operating me flow

We our activities restructuring operate continue to the end within are where margin recent ranges. ranges pushing top of us these to our long-term

see net this not the savings time, offering guidance be in levels. more While or at XXXX we operating above are at to for margins XXXX our continued expect XXXX and we specific to

this billion by of target flow at our to cash As we annual time. target, billion maintaining our $X are related XXXX $X free

restructuring activities benefit efficiency in flow our cash increase to will and a XXXX. will free Our be

still to target. achieve we do our have work to However,

restructuring lines. to on and that maintain growth of across We pace impact closely billings existing need decisions the our our business any appropriate we of impact ensure corresponding an monitor to

in we to new are AI of disciplined that to content are monitor we with and customer products cloud level spend appropriate to our and organizing traction. our validate that an Additionally, our remaining investments need ensure gaining

we subleasing disciplined to rates Thus, our and continue Lastly, need R&D these bring navigate us we amidst well legislation, we such execute actions targets, with deteriorating to spend varying FX as environment to taking headwinds. while dynamics. serve need that to as that need a -- factors closer to we to tax our exogenous remain softer are continue and numerous

making mentioned, In Drew for long-term conclusion, as changes we've to number success. been up of a set Dropbox

our the macro in our difficult businesses We our while execution strategy of are mindful remain that new transition, and about environment era. as come future and we AI improve challenges investing inherent and this we optimistic the with towards

on business value focused operating long-term remain and the will customers, efficiently for We driving our our shareholders.

With now operator turn that, for it to over the I'll Q&A.

comes proceed. question RBC Capital from [Operator Please with Instructions] And our Jaluria Markets. first Rishi

Hi. for Rishi. This on question. Thanks Poland is taking Richard for my

of that is the first investments potential a want today guess, about you that Thanks. wasn't might -- and particular one there core away little from. you too talked well of identified So bit is, of, that in the have I some anything FSS, less to the shift some outside maybe working you

Sure.

So I can start.

we're some been see Sign to of say DocSend. businesses, free promising ways, and invest include different would we've down, continuing invest. business the resources our the to growth categories levers. trimmed I'd some in business to each as a of then affected beyond are prospective but those areas, have their in mostly of So returns still core that investment if up they're our we future And affected coming in then

where environment response true -- and extra investment you take a in lot that and less features of DocSend in lower professional services. and DocSend lot means is security raising which of with of something those of lot But use to fundraising But for we're context. in fund to what stopping ways the sharing certainly fundraising there's areas may applicability has going on, like be DocSend case brought analytics in not a the demand a does, underlying the --

verticals support both So other and geographies. DocSend we're in DocSend investing we're in other diversifying to and

a bit potential in confident in be of the that's we of shifts continue context some but investment, behind businesses. these the the little of to So

Tim. is this then And

vast consolidate address Just we where . the opportunity We look were also And a of take also or more add and many could too which looked and marketing eliminate ultimately, to some sales across and to at execution that majority in across that. were hard cuts on in roles layers lower R&D to slowing briefly down the And to this cuts G&A. cuts company we where additional decision-making. minor performers. with did took streamline the had we we and

That's really acquisition then of FormSwift follow-up, that out a good And and the Got helpful. a as impressive it. on to performance super side. just see good

the strong other maybe around free and the there And With more maybe but inorganic just it's any balance could about that on sheet flow here? cash continued generation AI, anything you'd you think areas are the the side? inorganic from investing just talk to strategy

Yes.

So bringing had there. that great lot or certainly or as optionality will there's balance so so sheet, a change we've lot of had teams we we're with pointed and the a And of approach. or a cash acquisitions success a would -- out, our businesses, we And products have scale, we like acquisitions have that's a so in of different great strong of continue. happy lot -- we We've I acquisitions kind made. successful a you with great can say flow,

So lot in then where we've disciplined yes. at and space, certainly, to greater opportunity then time. start-ups continue adding AI and see interest same a a are because of lot and there's be put lot good AI interesting we're lot a got the certainly there. a places time, capital. in interested there's we'll of But of the to supply start-ups of we early-stage There's a And of spending

you. Got it. Thank

Please next JPMorgan. line moment the with you. proceed. Murphy from our Thank of it Mark comes question And for please. One

much. very you Thank

environment. So it's I surprisingly considering think a quarter the solid

have expected margin ARR the solid free headcount more well actions. might number. cash You growth, We upside, given just XX% have flow the as recent

through can of wondering that so incremental maybe yield year it's AI more expand for you much XX% How of see margins earmarked reduction if much that than we reduction, versus might bit. little flow that. typically, a next a And on margin going a to Because type how is if I'm to investments?

just follow-up. I'm to that I equation, particular So then have and trying understand a

guidance And our basis guidance, of be savings to is And guidance continue the take our XXX to will that XXXX but prior right and these indication annualized. early-stage of to now, the up into some from Yes. this offset we I'd margins savings which it's action. adding I the backfills these margin levels. we XXXX will look giving carry as XXXX at expect product which we partially in performance we'll our year. indicate benefits midpoint, those cases, opportunity we increasing forward of did or at the that then then expect some part investments note those the where And be XXXX this are points an not savings. did see net we're some above also development, with address around this AI our management as And is of to positions where risk this for I

basis know exactly like cost the half you're doing -- it more effect think so don't off year when of points about could points one And in the when the there think the books. way of we But maybe like of the basis I kind to and perhaps? that type XXX is roll a annualized XXX expenses more little is if a

on just going yet. 'XX Yes. elaborate more much I to don't think I'm

I next go for will our many thinking that year. into factors our guidance think there's

as I stated I be to levels. I on what think our far just I as fall above margins previously at these back expect or XXXX

you're And example of AI -- in enough. picturing your as mind Fair product. an out to provide is build then, it is Okay. possible what what Drew, -- an you

experience feel, maybe I'm or what user steering more as how product You start mentioned relatively mentioned search, you your the to would be envision right, AI investments the into you trying just would personalization. map. road

Sure.

also creating. forthcoming think at we're a But So products that existing high launches. And with share we'll across I with our specifics to level, AI new portfolio of have who applications is product you the really of more then there's of think like those you. when and really opportunities not -- look and use the to experiences. tools everyone they're most I sort straightforward at to But reimagine the ChatGPT, one personalized there's

in my why like question, ask to if certain what's company on you you Or my number who is you like, ask you a this -- want if we make thing? working passport decision? a did Or So a question again?

towards the now knows technical experience find possible of capability, positioned for years. an and brain a have actually ourselves well build we've ChatGPT. that to It silicon many foundation can and language use you build personalized the is to company, basically been natural have and you about we kind We where very building of sort that your staff your and that

much like So beyond applications of how do do you -- that's there breakthroughs things exciting are things text things with videos, been the in you been other lot a because pretty there's do can the all mean, I can audio. you can -- capabilities. with or images, examples with you There's multimodal the other can different

So have we're working we'll sharing there's different potential and that lot in the of more coming a months. on applications

Okay. like Thanks lot. that's we'll silicon a off you Congrats brain. something Maybe in and around see the well. from on future, branding that all rolls success. the the pretty I tongue

Thank you.

our Thank of question Please with comes you. please. Steve And proceed. One from next Citi. moment the line Enders

a it? And kind thinking the down like early about kind customers up But question that of kind bit. and been the AI I that of taking line? Great. being rolled and that a tested. I guess just could around mean feedback to for guess are following what's Universal you question. how Search trialing from of lever the Okay. on there Thanks little you're maybe about the I the is out thinking from are packaging what guess, monetization how

Sure.

So -- two just customers we're outside it's just ago. days literally reaching

it's tool great comprehensive want roll kind a before some the make and a the having to of before response. to for test and been of really feedback sure product more in We're little customers. let to internally, So that's rolling certainly really out using a battle more us helpful I

really that been we've some So about. beta, closed we're milestones excited like

I pricing As revenue. future will be we FSS as current not this incremental might buying it We who either otherwise not believe new be customers. FSS customer mean, packaging, or far be might of certainly believe or will categories unlock

-- we'll that unlock But the have far So the pricing think packaging as it's more to in front. specific we big -- a on and around at launches. actual share as

monitor closely stay feedback side. adoption we customer we then to consider certainly And investment this a on just briefly perspective, maybe and and plan from financial as disciplined further

and is quarters focus we bringing seeing products. do any market to on product will from it contribution revenue and we these start year several quality take adoption expect to Our driving this before

plans outperformance, of in Okay. other the the for kind it? more headwinds the aspects front. little versus think in for just upside I like do That's strong we seeing strength a ARR moving breakdown guess they that there? some kind guess, maybe maybe of sounds helpful some bit of in how on I that quarter. Like further the were individual context the around on of dig about you're any there parts FormSwift of relatively the

Sure.

So FormSwift did outperform our expectations.

we're to with about We continue FormSwift. front points that it progress expect the growth integration we're contribute X.X about and to year, excited on this our will making the

seeing result improving we're of onboarding think sign-up of as sign-up which also and I a Tap, in trends process. the Google One reduces our rollout friction

we quarter. continue our then, And did also see the we of plans, that exited a changes course, from our contribution we the and We June churn pricing see packaging to announced plants. teens across in on particularly as improve individual

here. Appreciate taking questions Okay. Perfect.

for One next please. moment question you. Thank our

comes question the of Please line Jefferies. next Brent from with Our Thill proceed.

Alan is on question. Thill. This my taking Thanks for Hi. for Brent

And churn? in are you considerations the factored your guide? you market? are out seeing seeing into what in terms are there First, Thanks. What what of

we're that far with continue had layoffs sensitivity those what pressure consistent I'd say in that themselves. as trends to downsell elevated that see we particularly from our we are as roughly See, fourth quarter, price customers, and saw seeing trends, the the teams, macro

And is the of individual levels did banking see again, are from elevated improve then DocSend, headwinds. SKUs, adding continue we to the continue exposed the where face particular, recent to churn though macro-related And to see some to our volatility fundraising events we trends Sign that vertical. and DocSend also exiting quarter. community, in those

challenging We macro impact We've expect will churn maybe of customer assumed QX. and landscape. similar continue that From we sensitivity factor level perspective, also a FX prudent the philosophy to and QX, saw appropriate key a elevated XXXX. such of conservatism do we headwinds remain degree an continue in incremental given trends and throughout as in a price guidance in

our and marketing. in latest the reduced our of reduction So and mindful force assuming and factoring this in investment in happen potential our that guidance in of certainly certainly in our of the and economy headcount level not signals billings also could effect any improvement and given these levels

these into of again, factored guidance. are all So considerations our

the growth drive And ARPU how about thinking color. user paid helpful Super we Thanks. to and be lastly, should mix of future growth?

Sure.

So from first contributor we user was about a added quarter. Family perspective, paid XXX,XXX significant users a paid to the in that. plan

seasonal users season. to increase in as particularly does have a also FormSwift this QX, tax due to business paying added

particularly new forward-looking first far per being guide and users debt paying ARPU neighborhood net quarter. navigate changes new with don't formally in packaging the expectations, XXX,XXX something as quarter macro in expect environment, expansion continue more in users our paying saw As as to of as pronounced this current year we to we and pricing the I'd the roughly we

Thanks. Super helpful.

Instructions] line Bank Please the of so Matt And you it with much. comes America. Thank [Operator of proceed. from Bullock

E on Hi, competitive here. the I question. in opportunity the terms the with? of environment can for thanks to give anything expect for you compete who you directly tap wanted Command there or to double Universal us most Search Is

Sure.

mean level say at very the category. I So I'd early high a for it's

distribution, they're are in are positioned customers we we're this I that important believe that make And we scale, to well space. most our infrastructure that Dropbox. relationship with that fact because and the trust trusting information and significant the in investments going have ability there of in startups there our already ideas technical our to pursue already think the the

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those think as well. larger incumbents are advantages the against I big

And of nice there the a that or anything just was then you. this ARPU terms beat quickly, expectations. quarter. else? It Thank Excellent. tailwinds the relative anything Is to just FormSwift call to was out in

Sure.

breaking benefits from components our driven and of ARPU So primarily by $X the was pricing of some sequentially that maybe down just initiatives. increased over increase

and And the this So was in FormSwift, I'd growth partially of our plan. say contributed continued $X, that's acquisition family offset our $X.XX. by about that about

very much. Thank Excellent. you

you. not I'm Thank queue showing And any further the questions in team.

next for everyone, we'll you for your support, in you, and dialing quarter. Thank see

And with thank that, today's in participating you conference. we for

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