Good afternoon, ladies and gentlemen, and thank you for joining Dropbox's Third Quarter 2021 Earnings Conference Call. All participants are in a listen only mode. As a reminder, this conference call is being recorded and will be available for replay from the Investor Relations section of Dropbox's website following the call. I will now turn it over to Karan Kapoor, Dropbox's Head of Investor Relations. Mr. Kapoor, please go ahead.

Thank you, and good afternoon. And welcome to Dropbox's third quarter 2021 earnings call. Today, Dropbox will discuss the quarterly financial results that were distributed earlier. Statements on this call include forward-looking statements, including future financial results, our goals and expectations regarding future revenue growth, profitability, and our ability to generate and sustain positive free cash flow; our expectations regarding remote work trends, related market opportunities, and our ability to capitalize on those opportunities; anticipated impacts to our financial results, including estimated impairment charges and subleasing income due to our shift to a virtual first work model; our capital allocation plans, including expected timing and volume of share repurchases; future M&A opportunities and other investments; the potential amendment to our San Francisco lease and its potential financial impact; as well as our ability to drive user growth, upgrades and retention through enhancements to our products, new products or features, and acquisitions; and our overall strategy, future performance, prospects, and ability to generate shareholder value. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected during this call. In particular, those described in our risk factors included in our Form 10-Q for the quarter ended June 30, 2021 and the risk factors that will be included in our Form 10-Q for the quarter ended September 30, 2021. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today, and we undertake no obligation to update them, except as required by law. Our discussion today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to, and not as a substitute for or in isolation from, our GAAP results. A reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our Form 8-K filed today with the SEC and may also be found in the supplemental investor materials posted on our Investor Relations website. Additional information regarding exchange rate assumptions used in our guidance is also available in our supplemental investor materials. I would now like to turn the call over to Dropbox's Co-Founder and Chief Executive Officer, Drew Houston. Drew?

Thanks, Karan, and good afternoon, everyone. Welcome to our Q3 2021 earnings call. On the call with me is Tim Regan, our Chief Financial Officer. Today, I'll provide an update on our product strategy and share business and product highlights from the quarter. Tim will then review our Q3 financial results and update our outlook for the remainder of the year. We had another strong quarter across the board, with revenue outperformance driven by continued momentum with our professional SKU, expansion in teams, and better retention across teams in mobile, all while achieving record free cash flow. We made great progress against our strategy of evolving the core Dropbox experience to meet the growing needs of freelancers, small teams, and mobile users, while investing in adjacent workflows to help our customers do more with their content. We're well on our way to achieving our long-term vision of creating one organized place for your content and all the workflows around it. Before I walk through highlights from the quarter, I want to share some context around why we believe this vision matters in today's world. As we shared before, the pandemic accelerated many trends already in play for us, such as digital transformation and the rise of the creator economy. But at the highest level, one of the most consequential changes was that 2020 was the year where knowledge workers globally, and probably most of us on this call, moved from working primarily in physical offices to working primarily on digital screens, and we believe this is a permanent shift. As we increasingly rely on them, these digital screens have become even more chaotic and overwhelming. Over the last several years, work has extended into the browser and across a sea of web-based productivity apps. What used to be 100 icons on your desktop are now 100 tabs in your browser. The shift to remote work has spotlighted this problem, and it's clear that we need a solution that organizes everything more than ever. Dropbox has long been the place where so many of our customers—whether they're creative teams, freelancers, or small businesses—do their most important work. Helping them organize their digital lives has always been a focus area for us. So it’s natural that now we're focused on solving the 2021 version of the problem we saw back in 2007. As we iterate on our product road map and execute against our current strategy, we're also building the foundation for this long-term vision, and I'm excited to share more about our progress here. Now turning to the quarter. As a reminder, our first strategic priority from earlier this year was to evolve the core Dropbox offering and strengthen our foundation for long-term growth. We've been executing against this priority in two ways: first, by focusing on our most passionate customers who use Dropbox for work, such as freelancers, solopreneurs, and small business teams; and second, by improving the mobile experience where nearly half of new users begin their Dropbox journey. For all these users, whether basic or paid, we're focused on delivering more intuitive experiences and driving optimizations around sharing, onboarding, and reliability. And I'm pleased to see the strategy translate into solid business wins. We've talked in prior quarters about the rise of the creator economy and the corresponding strength we’re seeing in our professional or pro SKU, and we saw that momentum continue in Q3. We've made steady improvements to the checkout and onboarding process for pro, which better identifies the right users and makes it easier for them to get the most value added from Dropbox from the moment they sign up. In addition to these solopreneurs, we're driving solid expansion in our team's plans, which represented a significant contribution to net new ARR in Q3. We leveraged data science around sharing activity to make it more seamless for admins and team members to invite additional users, both internally and externally. In addition to driving conversion of free users into self-serve paid teams, we also released some highly requested security features to drive retention. Now admins have the ability to enforce and edit password protection and link expiration for their teams, giving them more control over how their content is shared. While self-serve remains the vast majority of our go-to-market strategy, we also saw further improvements in retention with strategic accounts due to improvements we made in our managed sales motion. Shifting to mobile, where nearly half of all our new basic users are coming from. As discussed on our last earnings call, we made several enhancements to the mobile app to create a better experience for new Dropbox users. Features like faster upload speeds, improved reliability, and increased visibility around sharing have all driven higher app store ratings and customer satisfaction scores. In Q3, we improved the sharing experience further by reducing the number of steps non-Dropbox mobile users must take to download shared content, giving them a more seamless early experience with Dropbox. 75% of mobile basic users say their primary reason for downloading Dropbox is for sharing, so we're confident these enhancements will continue to drive higher conversion and retention among users who subscribe to the mobile channel. All these improvements in the core Dropbox offerings serve as an important foundation for our product road map and vision of building one organized place for your content and all the workflows around it. Next, I'd like to highlight the new product experiences we introduced in Q3 to better address this vision. For the majority of our customers who use Dropbox for work, a common complaint we hear is that they have trouble finding and accessing the information they need to do their work. While people can store their content across various cloud platforms, what they most need is a single place that keeps their content organized so they can spend more time on their work. We view advanced organization functionality as a competitive advantage, and delivering this to users will help drive both retention and conversion. This week, we introduced a number of new features for teams that help users automatically organize their content, and we also acquired a universal cloud search company, which I'll cover later. Simple, easy-to-use functionality has always been core to our product philosophy. We've focused on adding automation capabilities that our users can easily implement to better organize their uploaded content and find it quickly. We paired human input with machine learning capabilities so that our users are always in control. With our new automated folders, users can customize automated tasks around their files, including converting, categorizing, sorting, or tagging. Multi-file organization allows users to categorize and sort multiple files simultaneously based on date, keywords, or other criteria. With user-defined naming conventions, Dropbox saves users time by automatically updating file names and format types. Organizing files and folders is a critical first step to helping our customers do more with their content. Over the last year, we've seen this work evolve beyond the traditional office, as there has been an explosion in the creation of rich media like videos and PDFs on our platform. These are the fastest-growing types of content on Dropbox, with videos being the most common type of file shared on the platform, followed closely by PDFs. Nearly 50 billion PDFs were added or modified on Dropbox over the last year alone. To address these growing workflows, we've been investing in complementary workflows like DocSend and HelloSign, which remain our fastest-growing businesses. DocSend surpassed our expectations for the second straight quarter, and we’re focused on building on this momentum. By investing in improving the user experience and adding new functionality within adjacent workflows beyond fundraising, DocSend continues to see increases in both usage and retention. For HelloSign, we announced an integration with Microsoft SharePoint, allowing users to now send, sign, and save documents using HelloSign within their SharePoint workflow. We also saw good growth in the channel for HelloSign, which is a small but growing part of the business. There remains a significant opportunity for greater cross-selling and integration of HelloSign and DocSend into the core Dropbox platform. We're excited to offer our customers a more complete document workflow solution for streamlining transactions. We also introduced new product experiences that I'm very excited about. As we’ve shared recently, last year, we started seeing a dramatic increase in collaboration around video and images on Dropbox. We found that distributed teams and creatives have a lot of unmet needs. So we recognized a natural opportunity to offer some new, simple, lightweight tools to enable them to do more with their content in ways that traditional storage platforms have not supported. A good example of this is Dropbox Replay, which is a video collaboration tool that makes it easier for video production teams to collect, manage, and respond to feedback all in one place. Over 3.4 billion videos were added by customers in the first half of 2021, and video is now our most shared content type. Replay is currently in beta, but we’ve already received positive feedback from early customers who love its simple user interface and how it streamlines existing workflows since their video files are already on Dropbox. Replay is also integrated with several video editing solutions like Adobe Premiere Pro, and we're excited to expand its feature set towards general availability in 2022. We also introduced Dropbox Capture, which enables distributed teams to communicate synchronously through short video clips, reducing the need for meetings and lengthy emails. And Dropbox Shop offers freelancers and creators a seamless way to sell their digital content already stored in Dropbox. While these are all in very early stages, we're excited about our ability to introduce new capabilities to help our customers do more with their content. Just last week, we made another important step towards our long-term vision as we entered into a definitive agreement to acquire Command E, a universal search and productivity company. As I shared in my opening remarks, the content and information we need to do our work is distributed across files, folders, apps, and other productivity tools, making it harder for teams to stay organized. With the browser and web-based apps becoming even more central to knowledge work, we believe our recent acquisition of Command E will be a competitive differentiator. Command E has built powerful functionality that provides immediate access to everything you need in the cloud across your desktop and the browser from one universal search bar. The product and team are a great fit for Dropbox. We share a user-focused design philosophy and the belief in maintaining an open ecosystem so users can easily access all the tools they need to do their work. We expect to close this acquisition in Q4 and anticipate no material impact on our 2021 guidance. While it will take time to integrate Command E into Dropbox, this acquisition represents a crucial step towards our vision of creating one organized place for your content and the workflows around it. It's also an excellent example of our ability to leverage our healthy balance sheet to identify early-stage technology that can deliver long-term value to our customers. Finally, we remain focused on driving operational excellence by being thoughtful and disciplined with how we grow our business. On the technology front, we're increasing our adoption of SMR infrastructure, gaining an advantage in storage efficiency, particularly during these times of supply chain shortages. On the product side, Replay and Shop reached initial users in less than a year since the ideas were conceived, each staffed with lean teams. On the hiring front, through our virtual-first model, we are making progress in recruiting top talent outside of our higher cost locations. Through these efforts, we continue to drive efficiency across our company and remain committed to our long-term goals. And with that, I'll hand it over to Tim to walk through our financial results.

Thank you, Drew. Before turning to our quarterly results, I'd like to start with a reminder of our financial strategy. We continue to focus on balancing growth and profitability in a thoughtful, disciplined way. We remain committed to our long-term objectives, including delivering operating margins of 28% to 30% and generating annual free cash flow of $1 billion by 2024. We continue to allocate capital to organic initiatives and acquisitions that align with the vision that Drew outlined while also returning cash to shareholders in the form of share repurchases. Today, I'll talk through our performance for the quarter and our updated guidance for the year to demonstrate that we continue to operate the business in line with these principles. Let's turn to our third-quarter results. Total revenue for the third quarter increased 12.9% year-over-year to $550 million, beating our guidance range of $543 million to $546 million. Foreign exchange rates provided a tailwind of approximately two points to our growth. Total ARR for the quarter grew 12% year-over-year for a total of $2.218 billion. On a constant currency basis, ARR grew by $52 million sequentially and 10.4% year-over-year. Our continued growth in ARR reflects our efforts to attract new users to our premium SKUs and to improve retention by enhancing the user experience, with a specific emphasis on mobile, work, and team users. We exited the quarter with 16.49 million paying users and added approximately 350,000 net new paying users in the quarter, driven by strength in teams and the continued self-serve adoption of our family plan. Average revenue per paying user was $133.79 in Q3. Before I turn to the P&L, I'd like to highlight some of our go-to-market progress in the quarter. Our go-to-market strategies involve both our self-serve motion and our outbound sales motion. As Drew discussed, we saw better-than-expected expansion in our self-serve team SKUs due to making it easier for teams to invite additional members. We prompted users with suggested invites immediately after they shared content with a potential team member, driving an increase in invites and net licenses per team. We also observed improved retention in our outbound business, thanks to the changed strategy we adopted earlier this year, where we more than doubled the number of sales reps fully dedicated to customer renewals. Once again, we witnessed momentum in our Pro SKU, as Drew highlighted. Professional grew by approximately 30% year-over-year, driven by ongoing adoption by freelancers and creators. We continue to help our pro users understand the solutions we offer by enhancing our onboarding path to match their most common use cases with Pro's most pertinent functionality, leading to improved trial conversion as users developed a stronger appreciation of how Pro can help them get their work done. Lastly, we saw a healthy contribution to our net new paying users from our family plan. During the quarter, we redesigned our upgrade pages to better highlight our family plan to basic users nearing or surpassing their storage limits, thereby driving an uplift in conversion. Before we continue with further discussion of our P&L, I would like to note that unless otherwise indicated, all income statement measures mentioned are non-GAAP and exclude stock-based compensation, amortization of purchased intangibles, certain acquisition-related expenses, impairments of our real estate assets, and expenses tied to our reduction in force. Our non-GAAP net income also excludes net gains and losses on equity investments and includes the income tax effect of the aforementioned adjustments. I would also like to provide a brief update on our real estate strategy, where we are taking steps to lower costs in our real estate portfolio as part of our transition to a virtual-first model. We continue to make progress against our goals, executing subleases in Austin, Seattle, and Ireland this past quarter. As a result, we incurred no additional impairment, and our previous estimate of up to $450 million in total impairment charges remains unchanged. In addition, we are in discussions with our San Francisco landlord to pay roughly $32 million to buy out part of our lease where we have an existing subtenant. If completed, this would generate a long-term financial gain, as we expect our savings on future rent payments avoided to exceed the amounts we'd otherwise generate from the sublease by roughly $50 million. Thus, this would be an efficient use of our capital and aid our ability to achieve our $1 billion free cash flow target by 2024. We expect to execute this arrangement in Q4 this year, and we have factored this into our guidance, which I will touch on shortly. In the future, we may enter into similar buyouts with our landlords if the economics make sense for us, though there are no other pending deals at this time. With that, let's continue with the P&L. I'd note that all expense categories benefited from lower facilities-related costs driven by our employees working from home and a reduction in depreciation resulting from the write down in our real estate assets due to the impairment. Our personnel costs are also at reduced levels relative to last year because of our reduction in force and prudent hiring. Gross margin stood at 81% for the quarter, representing a year-over-year increase of one percentage point. The improvement in our gross margin is primarily due to the continued rollout of hardware efficiencies across our internally managed storage and data infrastructure. Third-quarter R&D expense totaled $133 million or 24% of revenue, decreasing from 27% of revenue in Q3 2020. Sales and marketing expense was $106 million or 19% of revenue, remaining roughly flat compared to Q3 2020 as we invested in brand awareness and product marketing campaigns. While early, we are encouraged by trends we've observed in search impression volumes. G&A expense was $46 million or 8% of revenue, which decreased compared to 10% of revenue in Q3 2020. In total, we recorded an operating profit of $161 million in Q3, representing an operating margin of 29%, a six percentage point improvement compared to Q3 2020. Net income for the third quarter was $147 million, a 33% improvement over Q3 2020. Diluted EPS was $0.37 per share based on 398 million diluted weighted average shares outstanding, up from $0.26 per share for Q3 2020. Moving on to our cash balance and cash flow. We finished the quarter with cash and short-term investments of $1.929 billion. Cash flow from operations was $231 million in the third quarter, while capital expenditures were $10 million during the quarter. This led to record quarterly free cash flow of $221 million compared to $187 million in Q3 2020. During the third quarter, we also added $44 million to our finance leases for data center equipment. Let's discuss our share repurchase activity. As I mentioned earlier, we plan to use our share repurchase program not only to return capital to our shareholders but also to reduce our share count. In Q3, we purchased 5.8 million shares, spending approximately $181 million. By the end of Q3, we had roughly $639 million remaining on our $1 billion share repurchase authorization. We believe that utilizing our capital for share repurchases is efficient, and we’ll leverage the strength of our balance sheet to return value to our shareholders. Now, let's turn to guidance for Q4 and the full year. For the fourth quarter of 2021, we expect revenue to lie between $556 million and $559 million. Currency exchange rates included in this guidance account for approximately two points of growth at the midpoint based on a combination of recent and historical average rates. We expect a non-GAAP operating margin of about 29%. Finally, we anticipate diluted weighted average shares outstanding to be between 391 million and 396 million shares based on our trailing 30-day average share price. For the full year 2021, we are raising our revenue guidance range, which was previously set between $2.136 billion and $2.142 billion, to $2.148 billion to $2.151 billion. Currency exchange rates included in this guidance account for approximately two points of growth at the midpoint based on a combination of recent and historical average rates. We are updating our gross margin guidance to around 80.5% for the full year. We are raising our non-GAAP operating margin guidance, from a previous range of 28.5% to 29% to approximately 29.5%. Taking into account the previously mentioned lease buyout opportunity, we now expect our full year free cash flow guidance, which was previously set between $710 million and $730 million, to be approximately $715 million. This includes cash outflows of $32 million for the lease buyout, $16 million for the 2021 installments of deal consideration holdback related to our acquisition of HelloSign, and one-time severance payments of around $14 million tied to our reduction in force from Q1. We now expect capital expenditures for 2021 to be around $35 million, net of tenant improvement allowances, as we finalize our investments in our lease space to optimize their potential for sublease income. We continue to expect additions to our finance lease lines to be approximately 6% of revenue for 2021. Lastly, we are maintaining our expectation for 2021 diluted weighted average shares outstanding to be between 397 million and 402 million shares. As a final note, I’d like to touch on our long-term operating margin and free cash flow targets. We are on track to take significant steps forward this year regarding profitability, outperforming our expectations, with operating margins projected to grow by approximately eight percentage points and free cash flow anticipated to improve by over $200 million year-over-year. It’s essential to recognize that we don’t expect this level of progress every year. While our success in profitability this year is commendable, we remain focused on driving sustainable revenue growth. Therefore, although we are nearing our long-term operating margin target range of 28% to 30%, we plan to invest in growth by hiring to support compelling product initiatives, funding marketing for awareness, and exploring inorganic methods to strategically expand our product portfolio. In addition, our margin profile in 2021 benefited from favorable FX rates, as well as reduced overhead and travel expenses from employees working from home. While we will continue as a virtual-first company, we may encounter additional expenses next year if pandemic restrictions soften. With these considerations in mind, we are maintaining our long-term operating margin target of 28% to 30% and our goal of $1 billion in free cash flow by 2024. In conclusion, we continue to execute well against our 2021 objectives. We believe that progress in these areas will generate long-term value for our shareholders, and we remain committed to making decisions that align with this financial trajectory. With that, I'll now turn it back to Drew for his closing remarks.

Thank you, Tim, and thank you all for joining us today. I'm incredibly proud of our third-quarter results and excited about the opportunities ahead of us. I believe Dropbox is well-positioned as our customers continue to seek technologies that help them adapt to the rapidly evolving work environment. We remain focused on executing against our 2021 strategic priorities, our long-term financial goals, and solidifying our position as the go-to solution for distributed work. And with that, I'd like to open the call for Q&A. Operator?

Our first question comes from Rishi Jaluria with RBC.

First, I wanted to touch, Drew, on a comment you made in your prepared remarks, which is regarding supply chain issues. So I understand you have much more efficient infrastructure with SMR probably with some of the other investments you've made, so maybe a little bit more insulated. But can you talk a little bit about how this impacts some of your future CapEx plans, and at what point do the supply chain issues out there start to become a worry? And then I've got a follow-up.

Well, I can start. And Tim, feel free to add on. As you’d imagine, we're keeping a close eye on shortages within the supply chain. It’s something our team has effectively managed. Our infrastructure team has done an excellent job in securing the supplies we need. This year, we don't foresee a reason why that would change. We've maintained great relationships with our vendors and partners, and our teams have proactively addressed these challenges. Obviously, the environment is somewhat unpredictable, but to date, we feel good about how we've managed this.

And then I want to think a little philosophically about the virtual-first model. It feels like you guys were very much early in this. And as Delta has pushed the office reopenings out, it seems like more and more companies are adopting that kind of virtual-first model that you pioneered. How have you shaped your view of what that virtual-first model looks like since you announced it and as things have been pushed out? More importantly, how do you want to keep the same culture that's kept Dropbox going strong all these years while also maintaining the flexibility you really want? And what lessons do you think that has for other companies looking to emulate that sort of virtually-first model going forward?

Well, I mean, we’re about a year in now. On one hand, I’m really happy with the decisions we made last October, and I don't think I’d make many different decisions. However, I don’t think anyone could have predicted the sequence of events or the Delta variant. Some of the top concerns for me include that we and many other companies in tech and beyond are still primarily remote, and we haven't really reintroduced the in-person experience in a consistent way. I think for many companies, they will begin that in Q1 next year or sometime thereafter. I hope things continue to trend positively regarding Delta and other variants. That said, we haven't fully implemented our hybrid models, which is challenging. The common belief in hybrid models is around how many days per week employees are in the office. This could cause major issues due to space utilization, leading to employees commuting but not having community. I think it's also surprising how widely people have spread out; many companies are realizing that a significant percentage of their workforce is outside commuting distance from their former offices, or even hiring remote workers outside of that distance. And that creates problems in hybrid models—if even one team member is remote, all meetings need to occur on Zoom. You may be paying for office space that remains under-utilized while employees have to make longer commutes for a remote experience. So we want to avoid that situation. We’ve learned a lot from other companies’ models and have sought to improve upon them with what we've discovered. I'm really proud of our work researching various models and we’ve posted all this information online in our virtual-first toolkit. Overall, I'm pleased with our current status, and we will continue to iterate on this, moving toward increased in-person engagement next year.

Our next question comes from Brent Thill with Jefferies.

This is Luv Sodha from Brent. I wanted to echo the congrats as well on another solid quarter. My first question would be for Drew. You have a lot of different levers on the innovation front, the creator economy, teams, HelloSign, DocSend. Could you speak to your top two or three levers that you think will help you sustain the current growth momentum?

The most vital are centered around the pillars we've discussed: evolving our core business, investing in future products, and achieving operational excellence. There are exciting developments in all these areas. For instance, we’ve made substantial enhancements to our mobile experience, seeing considerable improvements in app store ratings, driving increased conversion and retention, and facilitating better sharing. These incremental improvements are essential for sustained growth. However, I’m particularly excited about transformative changes in our core business that shift the focus from simply syncing files to organizing all your cloud content. This transition is crucial as we all operate more heavily in digital environments that can become overwhelming. The ongoing need for organization becomes evident as more workloads shift to the cloud, making it crucial to help users stay on top of what often becomes fragmented information. Our vision reflects our aim to solve the 2021 version of the problem we tackled back in 2007, the shift from 100 icons on desktops to 100 tabs in browsers. We're making strides toward transformation and will share more specifics in the future. The Command E acquisition represents a significant step along this path, as they share similar goals and design philosophies. Another area of focus includes enhancing our product experiences associated with our portfolio of workflows, complementing core solutions with tools like HelloSign and DocSend, particularly as demand for document collaboration and rich media has surged. Therefore, there's ample opportunity across our entire ecosystem, and I believe it positions us strongly for future growth.

A quick follow-up for Tim: it’s impressive to see the momentum on teams and strategic accounts. Should we expect more investments on the strategic side, or is the focus still primarily on self-serve motion?

While self-serve remains the vast majority of our go-to-market strategy, we are certainly encouraged by our outbound team's results. We continue to see success in the strategies adopted at the beginning of the year. This includes our more than doubling of the number of sales reps focusing on renewals, which has improved retention in our team accounts. We're also cross-selling add-ons in newer products like HelloSign and DocSend. Furthermore, we're investing additional resources in the channel, which is seeing positive traction.

Building on that, we also view these as an integrated motion along a single customer journey. Users often begin with Free Dropbox versions or an individual SKU, then integrate it in their workplace to become self-serve teams. Eventually, there is a potential for these self-serve expansions to necessitate engagement with IT, creating a managed outbound motion to advance deeper into the organization. So both approaches are valuable, targeting different stages of customer engagement.

Our next question comes from Dan Church with Goldman Sachs.

This is Dan Church on behalf of Kash Rangan. Just a couple of quick questions for me. With respect to DocSend and HelloSign doing better than expected, can you provide an update on the traction you're seeing with cross-selling between the two products and the overall momentum? Additionally, any way to frame the size of the growth from the new acquisitions?

We have conducted initial integrations with HelloSign, including our professional signature bundle and some product integrations. However, I would say we’re still in the early phases regarding the depth of these integrations. We're also in the early innings with DocSend, as both products require significant penetration within our overall Dropbox space. Therefore, we intend to invest more significantly here in the coming years, recognizing the substantial opportunity that lies ahead.

Over the last two quarters, there were mentions of improved overall retention rates. It's recurring here tonight, for both self-serve and strategic accounts. You’ve noted the addition of more reps focusing on renewals. On the self-serve side, what’s driving that retention rate? How should we consider its durability and the potential levers involved? Could you establish perspective on where we are now relative to where we stood last year or during the IPO?

I can start here, and Tim might add more. Retention fundamentally starts with the quality of the user experience. As a shift has occurred with more users spending time on mobile devices, it has become critical to ensure that experience is simple, fast, and streamlined. Most new sign-ups come from mobile, contributing to the importance of maximizing the mobile experience. Returning to basics, ensuring the user experience is seamless, and minimizing friction from signup and sharing processes has proven immensely beneficial. For instance, we’ve noted record app store ratings and notable upticks in conversion and retention, alongside increased sharing activity—creating a self-reinforcing cycle. This connection between simplifying user experiences and achieving fewer steps in the process is consequential, allowing us to attract more users and drive their engagement.

To briefly add on that, we don't update churn metrics quarterly, but overall churn did improve sequentially and year-over-year. Our revenue guidance reflects these current trends, and we remain encouraged by the results of our efforts.

We have a question from Pat Walravens with JMP.

This is Enzo on behalf of Pat. Congrats again on another strong quarter. I know it was mentioned during the prepared remarks that there was some context around the adoption of family plans. If you could expand on what that growth looks like, what the opportunity is now, and how you expect that to trend going forward?

I can speak at a high level, and then Tim can elaborate. The family plan is a great example of how, while most Dropbox subscribers use our service for work, many also utilize it for personal purposes. The family plan emerged from common requests and has proven quite popular, doing well overall. I'm mentioning it because, following the pandemic, the physical boundaries between home and work have largely dissolved for many of us. The same is true of the virtual boundary between home and work. Most users now manage personal matters alongside work-related ones, often on the same device, and this can be quite inconvenient. Dropbox has always been appreciated for addressing both personal and professional aspects together. We will continue to actively invest in such initiatives, and Tim can touch on the growth momentum.

To add further context, in Q3, we enhanced our upgrade pages for users nearing their storage quotas. As a result, we've actively promoted the family plan for those users for the first time, driving increased traffic and conversion. You can see this reflected in net new paying users, where we added around 350,000 during the quarter. Growth in the family plan contributed to this alongside the strengths in teams and professional offerings.

And we have a question from Steve Enders with KeyBanc.

In the prepared remarks, there was quite a lot of content around broader ambitions regarding content workflows and how Dropbox envisions that. However, I'm curious how the product road map adapts to align with that longer-term vision.

At a high level, we're evolving from simply syncing files to organizing all your cloud content. A key part of that transformation involves search. Command E is an excellent example, as it enables comprehensive indexing across cloud applications and provides a single, efficient search experience instead of several fragmented systems. We aim to assist users in achieving a unified view of their data, regardless of where it's stored, rather than forcing them to navigate multiple platforms. Features around organization, navigation, and search will underpin future user experiences. We also have extensive plans around workflows linked to content, leveraging solutions such as HelloSign and DocSend, allowing us to deliver comprehensive document workflows. There’s a significant opportunity to establish an end-to-end solution with Dropbox, DocSend, and HelloSign, ensuring that every stage of a document's lifecycle is managed within one streamlined ecosystem. Additionally, we are focusing on rich media workflows, seeking to develop tools that support our users in monetizing digital goods and enhancing creative outputs. We have a wide array of products and growth vectors available.

You mentioned Capture, Replay, and Shop, as well as the Passwords feature released over the past year. How does Dropbox evaluate monetizing these new solutions and where do you envision that path in the coming years?

We expect our product portfolio will feature various monetization paths, with individual solutions generating growth at different rates across various timelines. The core business serves as our largest lever, with day-to-day incremental improvements happening weekly and monthly. However, long-term, transformative shifts are measured over years. In our workflows, the existing products, such as HelloSign and DocSend, are already seeing meaningful scales and comprise our fastest-growing sectors. We will continuously iterate based on success, ensuring effective management of both incremental improvements and fruitful innovations.

Thank you. There are no further questions in the queue. I'd like to turn the call back to Drew Houston for any further remarks.

Thank you, everyone, for joining today. We greatly appreciate your continued support, and we look forward to speaking with you again next quarter.

This concludes today's conference call. Thank you for participating. You may now disconnect.