Dropbox, Inc. (NASDAQ:DBX) Q3 2019 Earnings Conference Call Transcript

Nov 07, 2019 • 05:00 pm ET

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Dropbox, Inc. (NASDAQ:DBX) Q3 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you, ladies and gentlemen, at this time we will begin conducting a question-and-answer session. [Operator Instructions]. Our first question comes from Alex Zukin with RBC Capital Markets. Your line is now open.

Analyst
Alex Zukin

Hey guys, congrats on a really strong quarter and thanks for taking my questions. Maybe just a -- first one for Ajay. Can you maybe talk about the ARR number for Q3, I think you guys mentioned in Q2 at the Analyst Day. I was hoping to see if you can provide an update. And then I've got a quick follow-up.

Executive
Ajay Vashee

Sure. Thanks for the question, Alex. So ARR as well as net revenue retention, our metrics that we are continuing to evaluate for ongoing disclosure, but I can share that ARR grew to about $1.77 billion in Q3, that's up from $1.65 billion in Q2, as we disclosed at our Analyst Day, and then that growth being driven by similar trends to revenue, namely strength in paying user growth and ARPU expansion. And at our Analyst Day in September, we also noted that net revenue retention had improved to the mid '90s and that's also consistent with what we saw in Q3.

Analyst
Alex Zukin

Perfect. And then you guys, I think you mentioned a couple of items where you were able to raise prices, you're very happy with the dynamics around both user adds and revenue retention and you made a comment around, you could see some, maybe impact to user adds over the next few quarters, but also a tailwind to revenue. I was hoping to see if there was any quantification you can provide around that in terms of just from a modeling perspective, how we should think about it going forward.

Executive
Ajay Vashee

Sure. So at a high level from a modeling perspective, I would kind of -- I would look to our revenue guidance for a sense of the growth that we expect to deliver in some of the implications for net new paying users and for ARPU over the next quarter and for the year, but to give a bit more color commentary on the repricing and repackaging initiative and more generally. As a quick reminder and as I mentioned during prepared remarks, earlier this year we announced a number of new product features really across our subscription plans with the additions we made to Plus, raise the price of that skewed by about 20%. Overall, those changes are being received really well, and so the features of our Plus plan are upgraded in June existing subs began renewing at the higher price point in July, and that process will continue for the next few quarters, really based on the annual LIBOR [Phonetic] cycle. The LIBOR cycle, starting of our annual subscribers, but overall, as you mentioned, Alex initiative has been a very strong tailwind to revenue, and that's reflected in our revised guidance for the year as it relates to paying users. We're seeing stable net retention across the business, so our annualized net revenue