Dropbox, Inc. (NASDAQ:DBX) Q3 2018 Earnings Conference Call Transcript

Nov 08, 2018 • 05:00 pm ET

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Dropbox, Inc. (NASDAQ:DBX) Q3 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good afternoon, ladies and gentlemen. Thank you for joining Dropbox's Third Quarter 2018 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 IR section of Dropbox's Website following this call.

I will now hand the call over to Darren Yip from Dropbox's IR team. Please go ahead.

Executive
Darren Yip

Thank you. Good afternoon, and welcome to Dropbox's third quarter 2018 earnings call. Today, Dropbox will discuss the quarterly financial results that were distributed earlier.

(Forward Looking Cautionary Statements)

Our discussion today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for or in isolation from our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our Form 8-K filed today with the SEC and may also be found in the supplemental investor materials posted on our IR website at investors.dropbox.com.

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

Executive
Drew Houston

Good afternoon, everyone and welcome to our earnings call. On the call with me is Ajay Vashee, our CFO and Yamini Rangan, our Chief Customer Officer will also join us during Q&A. Today, I'll talk about our business and product highlights and provide you with an update on our go-to-market strategy and ecosystem. Ajay will review our Q3 financial results and provide guidance for the remainder of fiscal 2018.

Q3 was another strong quarter with revenue growth of 26% year-over-year, driven by continued paying user growth and ARPU expansion. We also generated strong non-GAAP operating margin, which helped us deliver 33% free cash flow margin. These results continued to demonstrate the strength of our global collaboration platform, our efficient go-to-market strategy and our operational discipline. We hit significant milestones this past quarter that I'll speak to in a moment. But before I do that, I want to thank our team for a great first three quarters as a public company. We've built a strong sustainable business based on a deep understanding of our customers and the tools they need to do their best work.

We're operating at scale with over 12 million paying users, and we've healthy margins that continue to improve because of our infrastructure efficiencies. We're also executing against our mission of designing a more enlightened way of working. We're building a modern platform for work in collaboration by bringing together content, and all the communication and coordination around it. Users love our new product features and updates and we're continuing to expand our open ecosystem to reduce the friction between the tools people use at work.Moving on the latest on our products. We delivered a number of innovations in Q3 that makes the Dropbox experience even better for our users, teams, and admins. One of the most important ways of improving