Dropbox, Inc. (NASDAQ: DBX) announced its financial results for the fourth quarter and fiscal year ended December 31, 2024, marking a period of solid performance alongside significant strategic advancements. CEO Drew Houston emphasized that the company achieved strong results in 2024 while making notable progress in launching its AI-powered Dash for Business and restructuring its core operations to enhance efficiency. Houston outlined a clear vision for 2025, stating that Dropbox would continue scaling Dash, simplifying and strengthening its profitable core business, and integrating Dash with FSS, with early positive feedback from users underscoring the market need for practical AI-powered tools that address real challenges in managing and securing content.
In the fourth quarter, total revenue reached $643.6 million, representing a 1.4% year-over-year increase (1.1% on a constant currency basis) and a sequential rise of $4.8 million. Total annual recurring revenue climbed to $2.574 billion, up 2.0% year-over-year (1.3% on a constant currency basis), even though there was a slight quarter-over-quarter decline. Paying users numbered 18.22 million, up from 18.12 million, with the average revenue per paying user increasing to $140.06, despite a small reduction of 15,000 users compared to the previous quarter. The quarter saw improvements in both GAAP and non-GAAP gross margins, which increased to 81.2% and 83.1% respectively, aided by a revised estimate in the useful lives of certain infrastructure assets that reduced depreciation expense by $4.3 million. However, GAAP operating margin dropped to 13.7% from 42.1% due in part to $47.2 million in workforce reduction expenses, resulting in GAAP net income declining to $102.8 million from $227.3 million, while non-GAAP net income rose to $222.6 million, supported by operating cash flows of $213.8 million and free cash flow of $210.5 million.
Over the full fiscal year, Dropbox posted total revenue of $2.548 billion, an increase of 1.9% year-over-year (1.7% on a constant currency basis), with average revenue per paying user rising to $140.23. GAAP and non-GAAP gross margins improved to 82.5% and 84.0% respectively, reflecting enhanced operational efficiencies. Although GAAP operating margin decreased slightly to 19.1% from the prior year, non-GAAP operating margin increased to 36.4%, indicating better operational performance. GAAP net income was reported at $452.3 million, remaining nearly steady, while non-GAAP net income surged to $803.8 million from $685.0 million. The company also generated robust cash flows, with net cash provided by operating activities reaching $894.1 million and free cash flow totaling $871.6 million over the year, underscoring the financial strength and resilience of its business model.
The quarter further featured strategic financial initiatives, including the execution of a $2.0 billion private credit and guaranty agreement that yielded net proceeds of approximately $949.9 million after expenses, along with a repurchase of roughly 12.5 million shares for $350.4 million. For the full year, Dropbox repurchased about 49.5 million shares for $1.2 billion, and on December 11, 2024, the company announced a new share repurchase program authorizing an additional $1.2 billion for its Class A common stock. Future repurchases will be conducted in response to evolving market conditions, business opportunities, and legal requirements. These strategic moves, combined with robust cash flow generation and targeted share repurchase programs, underscore Dropbox’s commitment to enhancing shareholder value while positioning the company to capitalize on emerging market opportunities in the coming year.