DROPBOX, INC.
For the period ended Jun 30, 2025. Filed Aug 8, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2025 · Filed Aug 8, 2025
DBX$34.66-3.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2025-03-31; filed 2025-05-09.
0001467623-25-000060
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-06-30; filed 2025-08-08.
0001467623-25-000117
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 129 previous paragraphs and 141 current paragraphs.
84 unchanged; 31 reworded; 20 added; 13 removed; 1 previous and 6 current paragraphs rearranged.
Tables are not compared: 15 previous and 20 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (20)
Current report
During the three and six months ended June 30, 2025, our overall performance remained in line with expectations, with business trends reflecting the continued impact of macroeconomic conditions. We saw meaningful improvements in customer retention and engagement across both Individual and Teams plans. While Teams performance improved, it continues to be affected by cautious customer spend amid broader macroeconomic uncertainty. DocSend delivered strong year-over-year growth, while both Sign and FormSwift performed in line with expectations amid a competitive and cost-conscious environment.
Current report
Net loss on real estate assets consists of impairment charges in 2025. See Note 8, "Leases" for additional information.
Current report
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. While we are still assessing the legislation and its effect on our consolidated financial statements, we anticipate the included provisions that reinstate immediate expensing of research expenditures will reduce our domestic cash tax outflows in 2025. As the legislation was signed into law after the close of our second quarter, the impacts are not included in our operating results for the six months ended June 30, 2025.
Current report
Research and development expenses decreased $42.7 million or 18.8% during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to decreases of $32.6 million in employee-related costs driven by a decrease in headcount and $9.1 million in allocated overhead.
Current report
General and administrative expenses decreased $2.1 million or 3.4% during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to a decrease of $1.7 million in allocated overhead.
Current report
Net loss on real estate assets was $2.6 million during the three months ended June 30, 2025 and we did not record any gain or loss on real estate assets during three months ended June 30, 2024.
Current report
Other (expense) income, net increased by $3.9 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to a $3.0 million increase in foreign currency transaction losses.
Current report
Provision for income taxes decreased $0.9 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to a shift in the jurisdictional mix of income between U.S. and foreign operations.
Current report
Comparison of the six months ended June 30, 2025 and 2024
Current report
Revenue
Current report
Revenue decreased $15.4 million or 1.2% during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024 primarily due toour strategic decision to significantly reduce our investment in FormSwift and a decrease in paying users in Teams. In addition, revenue was negatively impacted by $3.5 million from changes in foreign exchange rates across multiple currencies.
Current report
Research and development
Current report
Research and development expenses decreased $83.4 million or 18.7% during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to decreases of $65.7 million in employee-related costs driven by a decrease in headcount and $15.7 million in allocated overhead.
Current report
Sales and marketing
Current report
Sales and marketing expenses decreased $41.5 million or 18.8% during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to a decrease of $27.6 million related to advertising due to our strategic decision to significantly reduce our investments in FormSwift and other marketing related expenses as well as a decrease of $11.2 million in employee-related costs driven by a decrease in headcount.
Current report
General and administrative
Current report
General and administrative expenses decreased $2.4 million or 2.1% during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to decreases of $3.0 million in allocated overhead and $1.9 million in employee-related costs driven by a decrease in headcount partially offset by an increase of $0.9 million related to outside services.
Current report
Net loss on real estate assets was $2.6 million during the six months ended June 30, 2025 and we did not record any gain or loss on real estate assets during the six months ended June 30, 2024.
Current report
Other (expense) income, net increased $3.9 million during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due to a $3.0 million increase in foreign currency transaction losses.
Current report
Provision for income taxes decreased $0.5 million during thesix months ended June 30, 2025, as compared to thesix months ended June 30, 2024, primarily due to a shift in the jurisdictional mix of income between U.S. and foreign operations.
Removed paragraphs (13)
Previous report
Our bundle subscription plans, such as Dropbox Essentials for solo professionals, Dropbox Business for small teams, and Dropbox Business Plus for larger teams, provide professionals and teams the ability to consolidate multiple offerings such as PDF editing, eSignature capabilities, document analytics, video collaboration tools, and advanced security functionality into a single place to manage their content.
Previous report
During the three months ended March 31, 2025, our overall performance was in line with expectations, with mixed results across our portfolio. We saw strength in our Individual plans, while elevated churn and down-sell pressure in our Teams plans, partially offset these gains. DocSend delivered solid growth, whereas Sign continued to face a challenging competitive environment. Additionally, our strategic decision to significantly reduce investment in FormSwift placed downward pressure on growth.
Previous report
Our FCF decreased for the three months ended March 31, 2025, compared to the three months ended March 31, 2024, primarily due to the payment for the third tranche termination fee for the partial termination of our lease for our San Francisco, California corporate headquarters (See Note 8 "Leases" for additional information) and payments associated with our 2024 workforce reduction.
Previous report
Interest (expense) income, net
Previous report
Other income, net
Previous report
Provision for income taxes
Previous report
Research and development expenses decreased $40.7 million or 18.6% during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to decreases of $32.9 million in employee-related costs and $6.6 million in allocated overhead.
Previous report
General and administrative expenses decreased $0.3 million or 0.6% during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to a decrease of $2.5 million in employee-related costs, offset by increases of $1.6 million in software and outside services.
Previous report
Interest (expense) income, net
Previous report
Other income, net
Previous report
Other income, net remained flat during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024.
Previous report
Provision for income taxes
Previous report
Provision for income taxes increased $0.4 million during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to an increase in income before income taxes, offset by an increase in availability of tax credits in the current year.
Reworded paragraphs (31)
Previous wording
By solving these universal problems, we’ve become invaluable to our users. The popularity of our platform allows us to scale efficiently. We’ve built a thriving global business with 18.16 million paying users.
Current wording
By solving these universal problems, we’ve become invaluable to our users. The popularity of our platform allows us to scale efficiently. We’ve built a thriving global business with 18.13 million paying users.
Previous wording
We generate revenue from individuals, families, teams, and organizations by selling subscriptions to our platform, which serve the varying needs of our diverse customer base. Subscribers can purchase individual licenses through our Plus, Professional or Essentials plan, or purchase multiple licenses through our Family plan or our Standard, Advanced, Business, Business Plus and Enterprise team plans. We also offer Dash for Business, our AI-powered universal search tool, which we offer to teams at an additional cost. Each team or family represents a separately billed deployment that is managed through a single administrative dashboard. Teams must have a minimum of three users, but can also have more than tens of thousands of users. Families can have up to six users. Customers can choose between an annual or monthly plan, with a small number of large organizations on multi-year plans. A majority of our customers opt for our annual plan, although we have seen and may continue to see an increase in customers opting for our monthly plans. We typically bill our customers at the beginning of their respective terms and recognize revenue ratably over the term of the subscription period. International customers can pay in U.S. dollars or a select number of foreign currencies.
Current wording
We generate revenue from individuals, families, teams, and organizations by selling subscriptions to our platform, which serve the varying needs of our diverse customer base. Our subscriptions include individual licenses through our Plus, Professional or Essentials plans, or multiple licenses through our Family plan or our Standard, Advanced, Business, Business Plus and Enterprise team plans. We also offer Dash for Business, our AI-powered universal search tool, which we offer to teams at an additional cost. Each team or family represents a separately billed deployment that is managed through a single administrative dashboard. Teams must have a minimum of three users, but can also have more than tens of thousands of users. Families can have up to six users. Customers can choose between an annual or monthly plan, with a small number of large organizations on multi-year plans. A majority of our customers opt for our annual plan, although we have seen and may continue to see an increase in customers opting for our monthly plans. We typically bill our customers at the beginning of their respective terms and recognize revenue ratably over the term of the subscription period. International customers can pay in U.S. dollars or a select number of foreign currencies.
Previous wording
Our premium subscription plans, such as Professional and Advanced, provide more functionality than our other subscription plans and have higher per user prices. Our Standard and Advanced subscription plans offer robust capabilities for businesses, and the vast majority of Dropbox Business teams purchase our Standard or Advanced subscription plans. While our Enterprise subscription plan offers more opportunities for customization, companies can subscribe to any of these team plans for their business needs.
Current wording
Our premium subscription plans, such as Professional and Advanced, provide more functionality than our other subscription plans and have higher per user prices. Our Standard, Advanced, Business and Business Plus subscription plans offer robust capabilities for businesses, and the vast majority of Dropbox Business teams purchase our Standard or Advanced subscription plans. While our Enterprise subscription plan offers more opportunities for customization, companies can subscribe to any of these team plans for their business needs.
Previous wording
In October 2024, we announced a reduction of our global workforce by approximately 20% to streamline our team structure to better align with our long-term growth and profitability objectives. During the three months ended March 31, 2025, we incurred $2.3 million of expenses related to severance, benefits, and other related items. See Note 1 "Description of the Business and Summary of Significant Accounting Policies - Reduction in Workforce" for additional information.
Current wording
In October 2024, we announced a reduction of our global workforce by approximately 20% to streamline our team structure to better align with our long-term growth and profitability objectives. During the three and six months ended June 30, 2025, we incurred $1.2 million and $3.5 million, respectively, of expenses related to severance, benefits, and other related items. See Note 1 "Description of the Business and Summary of Significant Accounting Policies - Reduction in Workforce" for additional information.
Previous wording
Our ARR fluctuates and may decrease in some periods as compared to prior periods. In the near term, ARR may experience a slight decline, reflecting our strategic decision to significantly reduce investments in FormSwift at the beginning of 2025.
Current wording
Our ARR fluctuates and may decrease in some periods as compared to prior periods. In the near term, ARR has experienced and may continue to experience a slight decline, reflecting our strategic decision to significantly reduce investments in FormSwift at the beginning of 2025.
Previous wording
Total ARR decreased for the period ended March 31, 2025, compared to the periods ended December 31, 2024 and March 31, 2024, primarily driven by our strategic decision to significantly reduce our investment in FormSwift at the beginning of 2025 and upsell weakness in Teams plans.
Current wording
Total ARR decreased for the period ended June 30, 2025, compared to the periods ended December 31, 2024 and June 30, 2024, primarily driven by our strategic decision to significantly reduce our investment in FormSwift at the beginning of 2025 and a challenging operating environment across our Teams plans.
Previous wording
The number of paying users as of March 31, 2025 declined as compared to December 31, 2024, largely from a decrease in paying users due to our strategic decision to significantly reduce our investments in FormSwift at the beginning of 2025 and a challenging operating environment across our Teams plans, but remained flat as compared to March 31, 2024 as a result of an increase in paying users from our Individual plans and from our acquisition of Reclaim offset by a decrease in paying users from FormSwift. We expect that the total number of paying users will continue to fluctuate from period to period and may decrease in some periods as compared to prior periods
Current wording
The number of paying users as of June 30, 2025 declined as compared to December 31, 2024 and June 30, 2024, largely from a decrease in paying users due to our strategic decision to significantly reduce our investments in FormSwift at the beginning of 2025 and a challenging operating environment across our Teams plans. We expect that the total number of paying users will continue to fluctuate from period to period and may continue to decrease in some periods as compared to prior periods.
Previous wording
As a result of the unfavorable impact of changes in foreign exchange rates across multiple currencies relative to the U.S. dollar and our strategic decision to significantly reduce our investment in FormSwift, partially offset by the favorable impact of an increased mix of sales towards our higher priced plans, we experienced a decrease in our average revenue per paying user for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.
Current wording
The average revenue per paying user for the three and six months ended June 30, 2025 declined as compared to the three and six months ended June 30, 2024, as a result of our strategic decision to significantly reduce our investment in FormSwift, an increased mix of sales towards our lower priced plans, and the unfavorable impact of changes in foreign exchange rates across multiple currencies relative to the U.S. dollar.
Previous wording
The below table sets forth our ARPU for the three months ended March 31, 2025 and 2024
Current wording
The below table sets forth our ARPU for the three and six months ended June 30, 2025 and 2024.
Previous wording
We expect our FCF to generally increase in the near term as we drive operating efficiencies, partly due to our 2024 reduction in workforce. We expect to continue to purchase infrastructure equipment to support our user base and anticipate that our capital expenditures will generally remain consistent in future periods as we continue to invest in our internal infrastructure, network and security. The timing of our operating expenses as described below, may cause FCF to vary from period to period as a percentage of revenue.
Current wording
We expect our FCF to generally increase in the near term as we drive operating efficiencies, partly due to our 2024 reduction in workforce. We expect to continue purchasing infrastructure equipment to support our user base and anticipate that our capital expenditures will increase the latter half of 2025. However, we expect overall spend in the future periods to remain consistent with prior years as we continue to invest in our internal infrastructure, network and security. The timing of our operating expenses as described below, may cause FCF to vary from period to period as a percentage of revenue.
Previous wording
We expect that research and development costs will decrease in absolute dollars and as a percentage of revenue in both the near term and long term as a result of our 2024 reduction in workforce, partially offset by continued hiring for our engineering, product, and design teams in roles critical to our future growth initiatives.
Current wording
We expect that research and development costs will decrease in absolute dollars and as a percentage of revenue in both the near term and long term as a result of our 2024 reduction in workforce, partially offset by continued hiring for our engineering, product, and design teams in roles critical to our future growth initiatives. The trend and timing of research and development expenses will depend in part on the timing for these new hires.
Previous wording
Other income, net consists of other non-operating gains or losses, including those related to gains or losses on sale of assets, foreign currency transaction gains and losses, lease arrangements, which include sublease income, and gains and losses related to our short-term investments.
Current wording
Other (expense) income, net consists of other non-operating gains or losses, including those related to gains or losses on sale of assets, foreign currency transaction gains and losses, lease arrangements, which include sublease income, and gains and losses related to our short-term investments.
Previous wording
Provision for income taxes consists of U.S. federal, state and foreign jurisdiction income taxes. For 2025 and 2024, the difference between the U.S. statutory rate and our effective tax rate is primarily due to jurisdictional mix of earnings, tax credits, state income taxes, and changes to our unrecognized tax benefits.
Current wording
Provision for income taxes consists of U.S. federal, state and foreign jurisdiction income taxes. For 2025 and 2024, the difference between the U.S. statutory rate and our effective tax rate is primarily due to the jurisdictional mix of earnings, tax credits, state income taxes, and changes to our unrecognized tax benefits.
Previous wording
(2)Includes expenses related to our 2024 reduction in workforce such as severance, benefits and other related items during the three months ended March 31, 2025. See Note 1, "Description of the Business and Summary of Significant Accounting Policies - Reduction in Workforce" for additional information.
Current wording
(2)Includes expenses related to our 2024 reduction in workforce such as severance, benefits and other related items during the three and six months ended June 30, 2025. See Note 1, "Description of the Business and Summary of Significant Accounting Policies - Reduction in Workforce" for additional information.
Previous wording
(2)Includes expenses related to our 2024 reduction in workforce such as severance, benefits and other related items during the three months ended March 31, 2025. See Note 1, "Description of the Business and Summary of Significant Accounting Policies - Reduction in Workforce" for additional information.
Current wording
(2)Includes expenses related to our 2024 reduction in workforce such as severance, benefits and other related items during the three and six months ended June 30, 2025. See Note 1, "Description of the Business and Summary of Significant Accounting Policies - Reduction in Workforce" for additional information.
Previous wording
Revenue decreased $6.6 million or 1.0% during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024 primarily due toupsell weakness and churn in Teams plansand our strategic decision to significantly reduce our investment in FormSwift, which together contributed to a decrease of $3.8 million in revenue. In addition, revenue was negatively impacted by $2.8 million from changes in foreign exchange rates across multiple currencies.
Current wording
Revenue decreased $8.8 million or 1.4% during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024 primarily due toour strategic decision to significantly reduce our investment in FormSwift as well as weakness in Teams plans as a result of churn and fewer customers upgrading, which together contributed to a decrease of $8.1 million in revenue. In addition, revenue was negatively impacted by $0.7 million from changes in foreign exchange rates across multiple currencies.
Previous wording
Our gross margin decreased during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to a 10.3% increase in our cost of revenue, along with a 1.0% decrease in revenue during the period, as described above.
Current wording
Our gross margin decreased during the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to a 15.6% increase in our cost of revenue, along with a 1.4% decrease in revenue during the period, as described above.
Previous wording
Sales and marketing expenses decreased $16.8 million or 15.4% during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due to decreases of $9.3 million related to advertising due to our strategic decision to significantly reduce our investments in FormSwift and other marketing related expenses as well as $5.5 million in employee-related costs.
Current wording
Sales and marketing expenses decreased $24.7 million or 22.0% during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due to a decrease of $18.3 million related to advertising due to our strategic decision to significantly reduce our investments in FormSwift and other marketing related expenses as well as a $5.4 million decrease in employee-related costs driven by a decrease in headcount.
Previous wording
Interest (expense) income, net increased by $21.9 million during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024, primarily due interest expense related to our term loan facility entered into in the fourth quarter of 2024.
Current wording
Interest (expense) income, net increased by $23.3 million during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024, primarily due interest expense related to our term loan facility entered into in the fourth quarter of 2024.
Previous wording
Cost of revenue increased $10.9 million or 10.3% during the three months ended March 31, 2025, as compared to the three months ended March 31, 2024. This increase was primarily driven by an $11.3 million increase in infrastructure costs as we continue to add equipment in support of our datacenter refresh cycle. Additionally, we saw a smaller depreciation benefit compared to the 2024 period from the change in useful lives from four to five years of certain infrastructure and component assets which was effective January 1, 2024.
Current wording
Cost of revenue increased $27.6 million or 13.0% during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024. This increase was primarily driven by a $23.7 million increase in infrastructure costs as we continue to add equipment in support of our datacenter refresh cycle. Additionally, we saw a smaller depreciation benefit compared to the 2024 period as a result of the change in useful lives from four to five years of certain infrastructure and component assets which was effective January 1, 2024.
Previous wording
As of March 31, 2025, we had cash and cash equivalents of $942.2 million and short-term investments of $237.8 million, which were held for working capital purposes. Our cash, cash equivalents, and short-term investments consist primarily of cash, money market funds, corporate notes and obligations, U.S. Treasury securities, certificates of deposit, asset-backed securities, commercial paper, foreign government securities, U.S. agency obligations, supranational securities, and municipal securities. As of March 31, 2025, $314.8 million of our cash and cash equivalents was held by our foreign subsidiaries. We do not expect to incur material taxes in the event we repatriate any of these amounts. Our cash is held at several large financial institutions and our investments are focused on the preservation of capital, fulfillment of our liquidity needs, and maximization of investment performance within the parameters set forth in our investment policy and subject to market conditions. The investment policy sets forth credit rating minimums, permissible allocations, and limits our exposure to specific investment types. We believe these policies mitigate our exposure to risk concentrations.
Current wording
As of June 30, 2025, we had cash and cash equivalents of $736.3 million and short-term investments of $218.4 million, which were held for working capital purposes. Our cash, cash equivalents, and short-term investments consist primarily of cash, money market funds, corporate notes and obligations, U.S. Treasury securities, certificates of deposit, asset-backed securities, commercial paper, foreign government securities, U.S. agency obligations, supranational securities, and municipal securities. As of June 30, 2025, $375.2 million of our cash and cash equivalents was held by our foreign subsidiaries. We do not expect to incur material taxes in the event we repatriate any of these amounts. Our cash is held at several large financial institutions and our investments are focused on the preservation of capital, fulfillment of our liquidity needs, and maximization of investment performance within the parameters set forth in our investment policy and subject to market conditions. The investment policy sets forth credit rating minimums, permissible allocations, and limits our exposure to specific investment types. We believe these policies mitigate our exposure to risk concentrations.
Previous wording
We have historically financed our operations primarily through cash generated from our operations, the convertible senior notes (the "Notes") issuance, borrowings from our term loan facility, equity issuances, and finance leases to finance infrastructure-related assets in co-location facilities that we directly lease and operate. We enter into finance leases in part to better match the timing of payments for infrastructure-related assets with that of cash received from our paying users. In our business model, some of our registered users convert to paying users over time, and consequently there is a lag between initial investment in infrastructure assets and cash received from some of our users. We also have delayed draw term loan commitments as part of the term loan facility for additional working capital flexibility, as described below.
Current wording
We have historically financed our operations primarily through cash generated from our operations, the Notes issuance, borrowings from our term loan facility, equity issuances, and finance leases to finance infrastructure-related assets in co-location facilities that we directly lease and operate. We enter into finance leases in part to better match the timing of payments for infrastructure-related assets with that of cash received from our paying users. In our business model, some of our registered users convert to paying users over time, and consequently there is a lag between initial investment in infrastructure assets and cash received from some of our users. We also have delayed draw term loan commitments as part of the term loan facility for additional working capital flexibility, as described below.
Previous wording
In December 2024, we entered into a secured five-year term loan facility in an aggregate principal amount of up to $2.0 billion, consisting of initial term loans and delayed draw term loan commitments each in an aggregate principal amount of up to $1.0 billion, respectively. The terms of the agreement also provide for a secured letter of credit facility in an aggregate amount of up to $35.0 million. The term loans have a maturity date of December 11, 2029. Quarterly principal payments began on March 31, 2025 and will continue on the last business day of each quarter thereafter, equal to 0.25% of the original principal amount of such term loans. As of March 31, 2025, we had $997.5 million outstanding on the initial term loans, no amounts outstanding on the delayed draw term loan commitments, and no letters of credit issued under the secured letter of credit facility.
Current wording
In December 2024, we entered into a secured five-year term loan facility in an aggregate principal amount of up to $2.0 billion, consisting of initial term loans and delayed draw term loan commitments each in an aggregate principal amount of up to $1.0 billion, respectively. The terms of the agreement also provide for a secured letter of credit facility in an aggregate amount of up to $35.0 million. The term loans have a maturity date of December 11, 2029. Quarterly principal payments began on March 31, 2025 and will continue on the last business day of each quarter thereafter, equal to 0.25% of the original principal amount of such term loans. As of June 30, 2025, we had $995.0 million outstanding on the initial term loans, no amounts outstanding on the delayed draw term loan commitments, and no letters of credit issued under the secured letter of credit facility.
Previous wording
Our principal uses of cash in recent periods have been funding our operations, repurchases of our Class A common stock, purchases of short-term investments, the satisfaction of tax withholding obligations in connection with the settlement of restricted stock units and awards, making principal payments on our finance lease obligations, and capital expenditures. Our Board of Directors has authorized three separate $1.2 billion Class A common stock repurchase programs since February 2022. We completed the February 2022 and July 2023 authorizations during the three months ended March 31, 2024, and March 31, 2025, respectively. We continue to repurchase shares under the December 2024 authorization. Share repurchases are made from time-to-time in private transactions or open market purchases as permitted by securities laws and other legal requirements and are subject to a review of the circumstances in place at that time, including prevailing market prices. The program does not obligate us to repurchase any specific number of shares and has no specified time limit; it may be discontinued at any time. During the three months ended March 31, 2025, we repurchased and subsequently retired 18.1 million of our Class A common stock for an aggregate amount of $504.1 million. This amount includes the 1% excise tax under the Inflation Reduction Act, as well as repurchase execution costs incurred in connection with our share repurchase program. The pace of our share repurchases may fluctuate due to various circumstances, including market conditions and our stock price.
Current wording
Our principal uses of cash in recent periods have been funding our operations, repurchases of our Class A common stock, the satisfaction of tax withholding obligations in connection with the settlement of restricted stock units and awards, making principal payments on our finance lease obligations, and capital expenditures. Our Board of Directors has authorized three separate $1.2 billion Class A common stock repurchase programs since February 2022. We completed the February 2022 and July 2023 authorizations during the three months ended March 31, 2024, and March 31, 2025, respectively. We continue to repurchase shares under the December 2024 authorization. Share repurchases are made from time-to-time in private transactions or open market purchases as permitted by securities laws and other legal requirements and are subject to a review of the circumstances in place at that time, including prevailing market prices. The program does not obligate us to repurchase any specific number of shares and has no specified time limit; it may be discontinued at any time. During the three and six months ended June 30, 2025, we repurchased and subsequently retired 14.2 million and 32.2 million, respectively, of our Class
Previous wording
Our future capital requirements will depend on many factors including our revenue growth rate, subscription renewal activity, billing frequency, the timing and extent of spending to support further infrastructure development and research and development efforts, the timing and extent of additional capital expenditures to invest in infrastructure equipment to support our user base, our ability to sublease space at office locations where we have unused spaces, the satisfaction of tax withholding obligations for the release of restricted stock units and awards, the expansion of sales and marketing and international operation activities, the introduction of new product capabilities and enhancement of our platform, the continuing market acceptance of our platform, and the volume, timing, and amount of our share repurchases. In addition, we have and may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. In light of all these circumstances, we may be required to seek additional equity or debt financing, or we may decide to do so opportunistically. In the event that additional financing is required or desired from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition could be materially and adversely affected.
Current wording
Our future capital requirements will depend on many factors including our revenue growth rate, subscription renewal activity, billing frequency, the timing and extent of spending to support further infrastructure development and research and development efforts, the timing and extent of additional capital expenditures to invest in infrastructure equipment to support our user base, our ability to sublease space at office locations where we have unused spaces, the satisfaction of tax withholding obligations for the release of restricted stock units and awards, investments in sales and marketing, the expansion of international operations, the introduction of new product capabilities and enhancement of our platform, the continuing market acceptance of our platform, and the volume, timing, and amount of our share repurchases. In addition, we have and may in the future enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights. In light of all these circumstances, we may be required to seek additional equity or debt financing, or we may decide to do so opportunistically. In the event that additional financing is required or desired from outside sources, we may not be able to raise it on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, results of operations, and financial condition could be materially and adversely affected.
Previous wording
For the three months ended March 31, 2025, net cash provided by operating activities was $153.8 million, which primarily consisted of our net income of $150.3 million, adjusted for stock-based compensation expense of $67.1 million, depreciation and amortization expenses of $38.1 million, and net cash outflow of $119.7 million from operating assets and liabilities. The outflow from operating assets and liabilities was primarily due to the payment of our 2024 corporate bonus, the payment for the third tranche termination fee for the partial termination of our lease for our San Francisco, California corporate headquarters, and payments for our 2024 reduction in workforce, offset by an increase in deferred revenue from increased subscription sales, as a majority of our paying users are invoiced in advance.
Current wording
For the six months ended June 30, 2025, net cash provided by operating activities was $414.3 million, which primarily consisted of our net income of $275.9 million, adjusted for stock-based compensation expense of $144.8 million, depreciation and amortization expenses of $77.1 million, and net cash outflow of $118.7 million from operating assets and liabilities. The outflow from operating assets and liabilities was primarily due to the payment of our 2024 corporate bonus, the payment for the third tranche termination fee for the partial termination of our lease for our San Francisco, California corporate headquarters, and payments for our 2024 reduction in workforce, offset by an increase in deferred revenue from increased subscription sales, as a majority of our paying users are invoiced in advance.
Previous wording
The decrease of $21.7 million in net cash provided by operating activities during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was primarily due to an increase of $34.9 million in cash outflows from changes in operating assets and liabilities driven, partially offset by an increase of $13.2 million in net income, as adjusted for stock-based compensation and depreciation and amortization expenses. The increase in cash outflows from operating assets and liabilities was primarily driven by the payment for the third tranche termination fee for the partial termination of our lease for our San Francisco, California corporate headquarters and payments for our 2024 reduction in workforce during the three months ended March 31, 2025.
Current wording
The increase of $8.2 million in net cash provided by operating activities during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was primarily due to an increase of $22.2 million in net income, as adjusted for stock-based compensation, depreciation and amortization expenses, and other non-cash losses (gains), partially offset by an increase of $14.0 million in cash outflows from changes in operating assets and liabilities. The increase in cash outflows from operating assets and liabilities was primarily driven by the payment for the third tranche termination fee for the partial termination of our lease for our San Francisco, California corporate headquarters and payments for our 2024 reduction in workforce.
Previous wording
For the three months ended March 31, 2025, net cash provided by investing activities was $35.8 million, which primarily related to $30.0 million in net investment activity inflows, driven by the maturities of short-term investments.
Current wording
For the six months ended June 30, 2025, net cash provided by investing activities was $48.2 million, which primarily related to $51.0 million in net investment activity inflows, driven by the maturities of short-term investments. The increase was partially offset by cash paid for an acquisition of $8.4 million.
Previous wording
The decrease of $77.9 million in net cash provided by investing activities during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was primarily due to a decrease of $87.2 million in net investment activity inflows, offset by a decrease of $9.1 million in cash paid for capital expenditures.
Current wording
The decrease of $128.7 million in net cash provided by investing activities during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was primarily due to a decrease of $151.8 million in net investment activity inflows, offset by a decrease of $13.0 million in cash paid for capital expenditures and $12.7 million in cash paid for acquisitions.
Previous wording
For the three months ended March 31, 2025, net cash used in financing activities was $578.5 million, which primarily consisted of $499.1 million for the repurchase of our common stock, $39.8 million for the satisfaction of tax withholding obligations for the release of restricted stock units and awards, $33.8 million in principal payments on finance lease obligations, and $2.5 million for the principal payment against the term loan facility.
Current wording
For the six months ended June 30, 2025, net cash used in financing activities was $1,066.3 million, which primarily consisted of $909.1 million for the repurchase of our common stock, $78.1 million for the satisfaction of tax withholding obligations for the release of restricted stock units and awards, $68.3 million in principal payments on finance lease obligations, and $5.0 million for the principal payments against the term loan facility.
Previous wording
The increase of $225.8 million in net cash used in financing activities during the three months ended March 31, 2025, compared to the three months ended March 31, 2024, was primarily due to an increase of $219.7 million in repurchases of our common stock, an increase of $2.5 million in principal payment against the term loan facility, and an increase of $1.5 million in cash paid for the satisfaction of tax withholding obligations for the release of restricted stock units and awards.
Current wording
The increase of $386.9 million in net cash used in financing activities during the six months ended June 30, 2025, compared to the six months ended June 30, 2024, was primarily due to an increase of $369.5 million in repurchases of our common stock, an increase of $5.0 million in principal payments against the term loan facility, an increase of $5.9 million in loan commitment fees related to the term loan facility, and an increase of $4.4 million in principal payments on finance lease obligations.
Rearranged current paragraphs (6)
Current report — wording carried from elsewhere
Our FCF increased for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, primarily due to an increase in cash provided by operating activities, in addition to a decrease in capital expenditures. The increase in cash provided by operating activities was primarily due to an increase in net income, as adjusted for stock-based compensation and depreciation and amortization expenses, partially offset by an increase in cash outflows from changes in operating assets and liabilities. The increase in cash outflows from operating assets and liabilities was primarily driven by the payment for the third tranche termination fee for the partial termination of our lease for our San Francisco, California corporate headquarters and payments for our 2024 reduction in workforce.
Current report — wording carried from elsewhere
Cost of revenue increased $16.7 million or 15.6% during the three months ended June 30, 2025, as compared to the three months ended June 30, 2024. This increase was primarily driven by a $12.4 million increase in infrastructure costs as we continue to add equipment in support of our datacenter refresh cycle.
Current report — wording carried from elsewhere
Cost of revenue, gross profit, and gross margin
Current report — wording carried from elsewhere
Our gross margin decreased during the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to a 13.0% increase in our cost of revenue, along with a 1.2% decrease in revenue during the period, as described above.
Current report — wording carried from elsewhere
Interest (expense) income, net increased by $45.2 million during the six months ended June 30, 2025, as compared to the six months ended June 30, 2024, primarily due interest expense related to our term loan facility entered into in the fourth quarter of 2024.
Current report — wording carried from elsewhere
A common stock for an aggregate amount of $403.0 million and $907.0 million, respectively. This amount includes the 1% excise tax under the Inflation Reduction Act, as well as repurchase execution costs incurred in connection with our share repurchase program. The pace of our share repurchases may fluctuate due to various circumstances, including market conditions, our stock price, and other strategic investments.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS