DROPBOX, INC.

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K. As discussed in the section titled “Note About Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” under Part II, Item 1A in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K. Our fiscal year ends December 31.

Current wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K. As discussed in the section titled “Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” under Part II, Item 1A in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K. Our fiscal year ends December 31.

Previous wording

Since our founding in 2007, our market opportunity grew as we’ve expanded from keeping files in sync to keeping teams in sync. In a world where using technology at work can be fragmented and distracting, Dropbox makes it easy to focus on the work that matters.

Current wording

Since our founding in 2007, our market opportunity has grown as we’ve expanded from keeping files in sync to keeping teams in sync. In a world where using technology at work can be fragmented and distracting, Dropbox makes it easy to focus on the work that matters.

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 18.09 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 18.19 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. Our subscriptions include individual licenses through our Plus, Simple, 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, 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, Simple, 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, 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 plans, which are offered at a discount compared to our monthly plans, 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

We generate over 90% of our revenue from self-serve channels—users who purchase a subscription through our app or website. To grow our recurring revenue base, we actively encourage our registered users to convert to one of our paid plans based on the functionality that best suits their needs. We do this via in-product prompts and notifications, time-limited free trials of paid subscription plans, email campaigns, and lifecycle marketing. We use these tactics in combination with the goal of generating increased recurring revenues from our existing user base.

Current wording

We generate over 90% of our revenue from self-serve channels—users who purchase a subscription through our app or website. To grow our recurring revenue base, we actively encourage our registered users to convert to one of our paid plans based on the functionality that best suits their needs. We do this via in-product prompts and notifications, time-limited free trials of paid subscription plans, email campaigns, and lifecycle marketing. We use these tactics in combination with the goal of generating increased recurring revenues from our existing paying user base.

Previous wording

During the three months ended March 31, 2026, we outperformed expectations, with stronger customer retention and engagement, particularly across Individual plans. Teams performance showed signs of stabilization, supported by continued progress on pricing and packaging simplification, a more unified checkout experience, credit card trials, and onboarding and activation improvements. While these initiatives are beginning to yield positive results, we remain cautious in our outlook as these efforts are still in the early stages of adoption and impact.

Current wording

During the three and six months ended June 30, 2026, we outperformed expectations, with stronger customer retention and engagement, particularly across Individual plans. Teams performance showed signs of positive growth, supported by continued progress on pricing and packaging simplification, a more unified checkout experience, credit card trials, and onboarding and activation improvements. While these initiatives are beginning to yield positive results, we remain cautious in our outlook as these efforts are still in the early stages of adoption and impact.

Previous wording

Total ARR increased for the period ended March 31, 2026, compared to the periods ended December 31, 2025 and March 31, 2025, primarily driven by a favorable impact of changes in foreign exchange rates across multiple currencies relative to the U.S. dollar and growth in Individual plans, offset by our strategic decision to significantly reduce our investment in FormSwift.

Current wording

Total ARR increased for the period ended June 30, 2026, compared to the periods ended December 31, 2025 and June 30, 2025, primarily driven by a favorable impact of changes in foreign exchange rates across multiple currencies relative to the U.S. dollar, improved retention from Teams plans and growth in Individual plans, offset by our strategic decision to significantly reduce our investment in FormSwift.

Previous wording

The number of paying users as of March 31, 2026 increased as compared to December 31, 2025, largely due to growth in our Simple plan partially offset by continued softness in our Teams plans, for which we are starting to see early signs of improvement, and reduced investment in FormSwift. However, the number of paying users as of March 31, 2026 declined as compared to March 31, 2025, largely due to our strategic decision to significantly reduce our investments in FormSwift at the beginning of 2025. 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.

Current wording

The number of paying users as of June 30, 2026 increased as compared to December 31, 2025 and June 30, 2025, largely due to growth in our Simple Plan, partially offset by reduced investment in FormSwift and continued softness in our Teams plans, for which we are starting to see signs of improvement in retention. 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.

Previous wording

The average revenue per paying user increased for the three months ended March 31, 2026 as compared to the three months ended March 31, 2025, as a result of the favorable impact of changes in foreign exchange rates across multiple currencies relative to the U.S. dollar offset by our strategic decision to significantly reduce our investment in FormSwift.

Current wording

The average revenue per paying user increased for the three and six months ended June 30, 2026 as compared to the three and six months ended June 30, 2025, as a result of the favorable impact of changes in foreign exchange rates across multiple currencies relative to the U.S. dollar and a shift to monthly subscription plans, offset by an increased mix of sales toward lower priced plans, such as Simple.

Previous wording

The below table sets forth our ARPU for the three months ended March 31, 2026 and 2025.

Current wording

The below table sets forth our ARPU for the three and six months ended June 30, 2026 and 2025.

Previous wording

Our FCF increased for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, primarily due to an increase in cash provided by operating activities, reflecting payments made in the first quarter of 2025 for the third tranche termination fee for the partial termination of our lease for our San Francisco, California corporate headquarters and related to our 2024 reduction in workforce.

Current wording

Our FCF increased for the six months ended June 30, 2026, compared to the six months ended June 30, 2025, primarily due to an increase in cash provided by operating activities, reflecting payments made in the first quarter of 2025 for the third tranche termination fee for the partial termination of our lease for our San Francisco, California corporate headquarters and related to our 2024 reduction in workforce.

Previous wording

We expect our FCF to fluctuate in the near term due to ongoing operating efficiency initiatives and variability in interest payments now that our term loan facility is fully drawn, as well as fluctuations in market interest rates. We expect capital expenditures will generally remain consistent in future periods as we continue to invest in our internal infrastructure, network and security to support our user base, except for a one-time incremental investment related to the build-out of our new San Francisco, California headquarters given we will vacate our current San Francisco, California headquarters due to subleases executed in the first quarter of 2026. 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 fluctuate in the near term due to ongoing operating efficiency initiatives and variability in interest payments now that our term loan facility is fully drawn, as well as fluctuations in market interest rates. We expect capital expenditures will generally remain consistent in future periods as we continue to invest in our internal infrastructure, network and security, except for a one-time incremental investment related to the build-out of our new San Francisco, California headquarters, which we expect to complete this year. 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

Our revenue growth is impacted by both the number of paying users and our ability to increase the average revenue per paying user. Our overall paying user growth rate has declined, and we expect growth in paying users to fluctuate from period to period in the future. If we do not successfully reverse the trend of decreasing average revenue per paying user, for example through increased sales of our higher-priced subscription plans, or otherwise offset slower growth or declines in paying users, we expect our revenue and revenue growth rate to continue decreasing.

Current wording

Our revenue growth is impacted by both the number of paying users and our ability to increase the average revenue per paying user. Our overall paying user growth rate has declined, and we expect growth in paying users to fluctuate from period to period in the future. While we have started to see signs of improving growth in net new paying users, if we do not successfully reverse the trend of decreasing average revenue per paying user, for example through increased sales of our higher-priced subscription plans, or otherwise offset slower growth or declines in paying users, we expect our revenue and revenue growth rate to continue decreasing.

Previous wording

Cost of revenue. Our cost of revenue consists primarily of expenses associated with the storage, delivery, and distribution of our platform for both paying users and free users. These costs, which we refer to as infrastructure costs, include depreciation of our servers located in co-location facilities that we lease and operate, rent and facilities expense for those datacenters, network and bandwidth costs, support and maintenance costs for our infrastructure equipment, and payments to third-party datacenter service providers. Cost of revenue also includes salaries, bonuses, employer payroll taxes and benefits, travel-related expenses, and stock-based compensation, which we refer to as employee-related costs, for employees whose primary responsibilities relate to supporting our infrastructure and delivering user support. Other non-employee costs included in cost of revenue include credit card fees related to processing customer transactions, and allocated overhead, such as facilities, including rent, utilities, depreciation on leasehold improvements and other equipment shared by all departments, and shared information technology costs. In addition, cost of revenue includes amortization of developed technologies, professional fees related to user support initiatives, and property taxes related to datacenter equipment.

Current wording

Cost of revenue. Our cost of revenue consists primarily of expenses associated with the storage, delivery, and distribution of our platform for both paying users and free users. These costs, which we refer to as infrastructure costs, include depreciation of our servers located in co-location facilities that we lease and operate, rent and facilities expense for those datacenters, network and bandwidth costs, support and maintenance costs for our infrastructure equipment, and payments to third-party datacenter service providers. Cost of revenue also includes salaries, bonuses, employer payroll taxes and benefits, travel-related expenses, and stock-based compensation, which we refer to as employee-related costs, for employees whose primary responsibilities relate to supporting our infrastructure and delivering user support. Other non-employee costs included in cost of revenue include credit card fees related to processing customer transactions, and allocated overhead, such as facilities, including rent, utilities, depreciation on leasehold improvements and other equipment shared by all departments, and shared information technology costs. In addition, cost of revenue includes amortization of developed technologies, professional fees related to user support initiatives, property taxes related to datacenter equipment, and copyright levies or similar fees imposed by collection agencies in European and other jurisdictions.

Previous wording

Gross margin. Gross margin is gross profit expressed as a percentage of revenue. Our gross margin may fluctuate from period to period based on the timing of additional capital expenditures and the related depreciation expense, or other increases in our infrastructure costs, as well as revenue fluctuations. We expect gross margin to remain relatively constant in both the near term and long term.

Current wording

Gross margin. Gross margin is gross profit expressed as a percentage of revenue. Our gross margin may fluctuate from period to period based on the timing of capital expenditures and the related depreciation expense, or other increases in our infrastructure costs, as well as revenue fluctuations. We expect gross margin to remain relatively constant in both the near term and long term.

Previous wording

Research and development. Our research and development expenses consist primarily of employee-related costs for our engineering, product, and design teams, compensation expenses related to key personnel from acquisitions and allocated overhead. These groups are responsible for the design, development, testing, delivery of new technologies and features, and support of our self-serve platform. We continue to focus our product development efforts on adding new features and enhancing the functionality and ease of use of our offerings. Additionally, research and development expenses include internal development-related third-party hosting fees. We have expensed almost all of our research and development costs as they were incurred.

Current wording

Research and development. Our research and development expenses consist primarily of employee-related costs for our engineering, product, and design teams, expenses related to our recent reduction in workforce such as severance, benefits and other related items, compensation expenses related to key personnel from acquisitions and allocated overhead. These groups are responsible for the design, development, testing, delivery of new technologies and features, and support of our self-serve platform. We continue to focus our product development efforts on adding new features and enhancing the functionality and ease of use of our offerings. Additionally, research and development expenses include internal development-related third-party hosting fees. We have expensed almost all of our research and development costs as they were incurred.

Previous wording

We expect that sales and marketing expenses will remain consistent in absolute dollars in the near term and could fluctuate in the long term as we seek to grow our user base and increase our brand awareness while also retaining flexibility to invest in growth.

Current wording

We expect that sales and marketing expenses could fluctuate in absolute dollars in the near term and in the long term as we seek to grow our user base and increase our brand awareness while also retaining flexibility to invest in growth.

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 income (expense), 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

Revenue increased $4.8 million or 0.8% during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025 primarily due to growth from our Individual plans, offset byour strategic decision to significantly reduce our investment in FormSwift and our plan to wind down operations by the end of 2026. In addition, revenue was positively impacted by changes in foreign exchange rates across multiple currencies.

Current wording

Revenue increased $5.8 million or 0.9% during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025 primarily due to positive impacts from changes in foreign exchange rates across multiple currencies and growth from our Individual plans, offset byour strategic decision to significantly reduce our investment in FormSwift and our plan to wind down operations by the end of 2026.

Previous wording

Research and development expenses increased $5.8 million or 3.3% during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to an increase of $6.2 million in employee-related costs driven by an increase in headcount.

Current wording

General and administrative expenses increased $5.0 million or 8.5% during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to an increase of $5.0 million in employee-related costs driven by an increase in headcount.

Previous wording

Interest expense, net increased by $22.1 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to an increase in interest expense related to our term loan facility now that it is fully drawn.

Current wording

Interest expense, net increased by $31.4 million during the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, primarily due to an increase in interest expense related to our term loan facility now that it is fully drawn.

Previous wording

Cost of revenue increased $11.4 million or 9.8% during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. This increase was primarily driven by an $11.4 million increase in infrastructure costs, including costs associated with adding equipment in support of our data center refresh cycle, data center facilities costs, and third party hosting fees.

Current wording

Cost of revenue increased $12.7 million or 5.3% during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. This increase was primarily driven by a $14.4 million increase in infrastructure costs, including costs associated with adding equipment in support of our data center refresh cycle, data center facilities costs, and third party hosting fees.

Previous wording

Our gross margin decreased during the three months ended March 31, 2026 compared to the three months ended March 31, 2025, primarily due to a 9.8% increase in our cost of revenue, partially offset by a 0.8% increase in revenue during the period, as described above.

Current wording

Our gross margin decreased during the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to a 5.3% increase in our cost of revenue, partially offset by a 0.8% increase in revenue during the period, as described above.

Previous wording

General and administrative expenses increased $3.7 million or 6.9% during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to lower expenses in the first quarter of 2025 resulting from the release of $4.3 million of non-income tax reserves partially offset by a decrease of $1.6 million in professional services.

Current wording

General and administrative expenses increased $8.7 million or 7.7% during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025. The increase was primarily driven by a $6.8 million increase in employee-related costs driven by an increase in headcount, and lower expenses in the first quarter of 2025 due to the release of $4.3 million of non-income tax reserves, partially offset by a $2.5 million decrease in professional services expense.

Previous wording

Other income, net increased by $5.0 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to a $2.7 million increase in foreign currency transaction gains and a $2.1 million gain on datacenter equipment resales.

Current wording

Other income (expense), net increased by $9.9 million during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to a $7.3 million increase in foreign currency transaction gains and a $2.6 million gain on datacenter equipment resales.

Previous wording

Provision for income taxes increased $7.7 million during the three months ended March 31, 2026, as compared to the three months ended March 31, 2025, primarily due to the impact of the One Big Beautiful Bill Act reflected in the three months ended March 31, 2026, a reduction in stock based compensation tax benefits, and changes to our unrecognized tax benefits.

Current wording

Provision for income taxes increased $7.4 million during the six months ended June 30, 2026, as compared to the six months ended June 30, 2025, primarily due to the impact of the One Big Beautiful Bill Act reflected in the six months ended June 30, 2026, a reduction in stock-based compensation tax benefits, and changes to our unrecognized tax benefits.

Previous wording

As of March 31, 2026, we had cash and cash equivalents of $1,207.4 million and short-term investments of $81.4 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, asset-backed securities, U.S. agency obligations, supranational securities, and municipal securities. As of March 31, 2026, $304.3 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, 2026, we had cash and cash equivalents of $1,056.2 million and short-term investments of $57.6 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, asset-backed securities, U.S. agency obligations, supranational securities, and municipal securities. As of June 30, 2026, $265.2 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

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 initial delayed draw term loan commitments (the "initial delayed draw term loans") each in an aggregate principal amount of up to $1.0 billion, respectively. The terms of the initial Credit Agreement also provide for a secured letter of credit facility in an aggregate amount of up to $35.0 million. In September 2025, we entered into the First Amendment to the term loan facility which provided for additional secured delayed draw term loan commitments in an aggregate principal amount of up to $700.0 million (the "2025 delayed draw term loans"), which was drawn in the first quarter of 2026 to settle the 2026 Notes as described above, with the remaining proceeds available for general corporate purposes.

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 initial delayed draw term loan commitments (the "initial delayed draw term loans") each in an aggregate principal amount of up to $1.0 billion, respectively. The terms of the initial Term Loan Credit Agreement also provide for a secured letter of credit facility in an aggregate amount of up to $35.0 million. In September 2025, we entered into the First Amendment to the term loan facility which provided for additional secured delayed draw term loan commitments in an aggregate principal amount of up to $700.0 million (the "2025 delayed draw term loans"), which was drawn in the first quarter of 2026 to settle the 2026 Notes as described above, with the remaining proceeds available for general corporate purposes.

Previous wording

The initial term loans and initial delayed draw term loans have a maturity date of December 11, 2029 and the 2025 delayed draw term loans have a maturity date of September 9, 2030. Quarterly principal payments for the initial term loans and initial delayed draw term loans began on March 31, 2025 and on the last business day of the quarter after the funding of such loans, respectively, 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 or such greater percentage as may be required to make the initial delayed draw term loans fungible with any then-outstanding initial term loans and initial delayed draw term loans. Quarterly repayments of 0.25% of the original principal amount of the 2025 delayed draw term loans began on March 31, 2026 and on the last business day of the quarter after the funding of such loans and continuing thereafter. As of March 31, 2026, we had $2,681.6 million outstanding on the term loan facility and no commitment remained available. As of March 31, 2026, $18.7 million of letters of credit were issued and $16.3 million remains to be issued under the letter of credit facility.

Current wording

The initial term loans and initial delayed draw term loans have a maturity date of December 11, 2029 and the 2025 delayed draw term loans have a maturity date of September 9, 2030. Quarterly principal payments for the initial term loans and initial delayed draw term loans began on March 31, 2025 and on the last business day of the quarter after the funding of such loans, respectively, 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 or such greater percentage as may be required to make the initial delayed draw term loans fungible with any then-outstanding initial term loans and initial delayed draw term loans. Quarterly repayments of 0.25% of the original principal amount of the 2025 delayed draw term loans began on March 31, 2026 and on the last business day of the quarter after the funding of such loans and continuing thereafter. As of June 30, 2026, we had $2,674.8 million outstanding on the term loan facility and no commitment remained available. As of June 30, 2026, $21.1 million of letters of credit were issued and $13.9 million remains to be issued under the letter of credit facility.

Previous wording

The term loan facility permits us, subject to satisfaction of certain conditions, including obtaining commitments from new or existing lenders, to add new term loan facilities or increase the term loan commitments under the term loan agreement, in each case, subject to certain limits. Additionally, the Amended Credit Agreement contains customary representations and warranties, customary affirmative and negative covenants, and customary events of default. Failure to comply with these covenants may result in a portion of the outstanding term loan debt becoming due immediately. We were in compliance with all covenants under the term loan facility as of March 31, 2026.

Current wording

The term loan facility permits us, subject to satisfaction of certain conditions, including obtaining commitments from new or existing lenders, to add new term loan facilities or increase the term loan commitments under the term loan agreement, in each case, subject to certain limits. Additionally, the Amended Term Loan Credit Agreement contains customary representations and warranties, customary affirmative and negative covenants, and customary events of default. Failure to comply with these covenants may result in a portion of the outstanding term loan debt becoming due immediately. We were in compliance with all covenants under the term loan facility as of June 30, 2026.

Previous 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 RSUs and RSAs, making principal payments on our finance lease obligations, and capital expenditures. Our Board of Directors has authorized two separate $1.2 billion Class A common stock repurchase programs in July 2023 and December 2024. We completed the July 2023 and December 2024 authorizations during the three months ended March 31, 2025 and December 31, 2025, respectively. In August 2025, our Board of Directors authorized a new repurchase program of up to an additional $1.5 billion of the outstanding shares of our Class A common stock. 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, 2026, we repurchased and subsequently retired 14.3 million shares of our Class A common stock for an aggregate amount of $370.0 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, our stock price, and other strategic investments.

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 RSUs and RSAs, making principal payments on our finance lease obligations, and capital expenditures. Our Board of Directors has authorized a share repurchase program for the repurchase of shares of our Class A common stock. As of June 30, 2026 $1.4 billion remained available for repurchases, including an increase of $900.0 million authorized by our Board of Directors in June 2026. 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, 2026, we repurchased and subsequently retired 12.6 million and 26.9 million shares, respectively, of our Class A common stock for an aggregate amount of $318.0 million and $688.0 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.

Previous wording

For the three months ended March 31, 2026, net cash provided by operating activities was $204.5 million, which primarily consisted of our net income of $114.5 million, adjusted for stock-based compensation expense of $71.1 million, depreciation and amortization expenses of $39.1 million, and net cash outflow of $49.9 million from operating assets and liabilities. The outflow from operating assets and liabilities was primarily due to the payment of our 2025 corporate bonus.

Current wording

For the six months ended June 30, 2026, net cash provided by operating activities was $443.0 million, which primarily consisted of our net income of $210.3 million, adjusted for stock-based compensation expense of $148.4 million, depreciation and amortization expenses of $75.5 million, and net cash outflow of $44.4 million from operating assets and liabilities. The outflow from operating assets and liabilities was primarily due to the payment of our 2025 corporate bonus.

Previous wording

The increase of $50.7 million in net cash provided by operating activities during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to a decrease of $69.8 million in cash outflows from changes in operating assets and liabilities, primarily driven by the payments made in the first quarter of 2025 for the third tranche termination fee for the partial termination of our lease for our San Francisco, California corporate headquarters and for payments related to our 2024 reduction in workforce. This was partially offset by a decrease of $19.1 million in net income, as adjusted for stock-based compensation, depreciation and amortization expenses, and other non-cash (gains) losses.

Current wording

The increase of $28.7 million in net cash provided by operating activities during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily due to a decrease of $74.3 million in cash outflows from changes in operating assets and liabilities, primarily driven by the payments made in the first quarter of 2025 for the third tranche termination fee for the partial termination of our lease for our San Francisco, California corporate headquarters and for payments related to our 2024 reduction in workforce. This was partially offset by a decrease of $45.6 million in net income, as adjusted for stock-based compensation, depreciation and amortization expenses, and other non-cash (gains) losses.

Previous wording

Net cash provided by investing activities is primarily impacted by net investment activity, which includes sales, maturities, and purchases of short-term investments, cash paid for acquisitions, and for purchasing infrastructure equipment in co-location facilities that we directly lease and operate.

Current wording

Net cash provided by investing activities is primarily impacted by net investment activity, which includes sales, maturities, and purchases of short-term investments, cash paid for acquisitions, purchases of intangible assets, and for purchasing infrastructure equipment in co-location facilities that we directly lease and operate.

Previous wording

For the three months ended March 31, 2026, net cash provided by investing activities was $66.9 million, which primarily related to $65.6 million in net investment activity inflows, driven by the maturities of short-term investments.

Current wording

For the six months ended June 30, 2026, net cash provided by investing activities was $86.1 million, which primarily related to $89.5 million in net investment activity inflows, driven by maturities of short-term investments, offset by cash paid for capital expenditures of $4.5 million.

Previous wording

The increase of $31.1 million in net cash provided by investing activities during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to an increase of $35.6 million in net investment activity inflows, offset by a decrease of $6.0 million in cash receipts from equipment rebates.

Current wording

The increase of $37.9 million in net cash provided by investing activities during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily due to an increase of $38.5 million in net investment activity inflows and decrease of $8.4 million in cash paid for acquisitions, offset by a decrease of $8.1 million in cash receipts from equipment rebates.

Previous wording

For the three months ended March 31, 2026, net cash provided by financing activities was $46.2 million, which primarily consisted of $1,200.0 million in proceeds from the term loan facility. The inflow was offset by $695.8 million for the repayment of convertible senior notes at maturity, $366.8 million for the repurchase of our common stock, $30.3 million for the satisfaction of tax withholding obligations for the release of RSUs and RSAs, $43.4 million in principal payments on finance lease obligations, $8.1 million in payments of debt issuance costs and loan commitment fees under the term loan facility, and $6.8 million in principal payments against the term loan facility.

Current wording

For the six months ended June 30, 2026, net cash used in financing activities was $363.8 million, which primarily consisted of $695.8 million for the repayment of convertible senior notes at maturity, $697.1 million for the repurchase of our common stock, $62.9 million for the satisfaction of tax withholding obligations for the release of RSUs and RSAs, $78.7 million in principal payments on finance lease obligations, $13.2 million in payments of debt issuance costs and loan commitment fees under the term loan facility and revolving credit facility, and $13.5 million in principal payments against the term loan facility. These outflows were offset by $1,200.0 million in proceeds from the term loan facility.

Previous wording

The increase of $624.7 million in net cash provided by financing activities during the three months ended March 31, 2026, compared to the three months ended March 31, 2025, was primarily due to an increase of $1,200.0 million in proceeds from the term loan facility and a decrease of $132.3 million in repurchases of our common stock. This was offset by an increase of $695.8 million for the repayment of convertible senior notes at maturity, an increase of $9.6 million in principal payments on finance lease obligations, and an increase of $4.8 million in payments of debt issuance costs and loan commitment fees.

Current wording

The decrease of $702.5 million in net cash used in financing activities during the six months ended June 30, 2026, compared to the six months ended June 30, 2025, was primarily due to an increase of $1,200.0 million in proceeds from the term loan facility and a decrease of $212.0 million in repurchases of our common stock. This was offset by an increase of $695.8 million for the repayment of convertible senior notes at maturity, and an increase of $10.4 million in principal payments on finance lease obligations.