Dropbox (DBX) risk factors, FY2025 10-K

Risks Related to Our Business and Operations

1. 01Our rate of growth has declined and we have experienced negative growth in past periods. If we do not successfully execute our plan for future growth, our growth rate may continue to decline and we may continue to experience negative growth in future periods34% rewritten
2. 02Our business depends on our ability to attract and retain users, convert users to paying users and upgrade paying users, and any decline in acquisitions, renewals or upgrades could adversely affect our future results of operations47% rewritten
3. 03We have in the past and may continue to experience privacy and data security breaches or incidents
4. 04Our business could be harmed by any significant disruption of service on our platform or loss of content
5. 05We operate in competitive markets, and we must continue to compete effectively
6. 06Failure to respond to rapid technological changes, extend our platform, or develop new features or products may harm our ability to compete effectively, which would adversely affect our business27% rewritten
7. 07Our business depends upon the interoperability of our platform across devices, operating systems, and third-party applications that we do not control
8. 08We generate revenue from sales of subscriptions to our platform, and declines in demand for our platform, or for content collaboration solutions in general, could negatively impact our business
9. 09We depend on our key personnel and other highly qualified personnel, and if we fail to attract, integrate, and retain our personnel, and maintain our unique corporate culture, our business could be harmed
10. 10We operate with a Virtual First workforce and the long-term impact of this model on our financial results and business operations remains uncertain34% rewritten
11. 11Our business may be significantly impacted by general economic, political, and market conditions, including any resulting effect on consumer or business spending
12. 12Our lack of a significant outbound sales force may limit the potential growth of our business
13. 13We may expand sales to large organizations, which could lengthen sales cycles and result in greater deployment challenges
14. 14Any failure to offer high-quality customer support may harm our relationships with our users and our financial results
15. 15Our business depends on a strong brand, and if we are unable to maintain and enhance our brand, our ability to expand our base of users will be impaired and our business, results of operations, and financial condition will be harmed
16. 16Our current operations outside the United States and our efforts to expand, subject us to increased business and economic risks that could impact our results of operations
17. 17We depend on our infrastructure and third-party datacenters, and any disruption in the operation of these facilities or failure to renew the services could adversely affect our business
18. 18We have relationships with third parties to provide, develop, and create applications that integrate with our platform, and our business could be harmed if we are unable to continue these relationships
19. 19Our use of open source software could negatively affect our ability to offer and sell subscriptions to our platform and subject us to possible litigation
20. 20Our ability to sell subscriptions to our platform and retain users could be harmed by real or perceived material defects or errors in our platform
21. 21The pursuit of acquisitions or investments may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not they are consummated
22. 22Our current indebtedness, including our 2026 Notes, 2028 Notes and our term loan facility, place significant restrictions on our business and could have important consequences to our stockholders and effects on our business, as could any future indebtedness
23. 23Our operations may be interrupted and our business, results of operations, and financial condition could be adversely affected if we default on our leasing or credit obligations21% rewritten

Risks Related to Our Financial Performance or Results

1. 24Our revenue growth rate has declined in recent periods and may continue to slow in the future
2. 25We may increase expenses in the future, and we may not be able to achieve or maintain profitability in future periods
3. 26Servicing our indebtedness under our term loan facility, 2026 Notes, and 2028 Notes may require a significant amount of cash, and we may not have sufficient cash flow or the ability to raise the funds necessary to satisfy our obligations under our term loan facility, 2026 Notes, or 2028 Notes
4. 27Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business22% rewritten
5. 28Our results of operations may not immediately reflect downturns or upturns in sales because we recognize revenue from our users over the term of their subscriptions with us
6. 29Our results of operations, which are reported in U.S. dollars, could be adversely affected if currency exchange rates fluctuate substantially in the future
7. 30We are subject to counterparty risk with respect to the convertible note hedge transactions
8. 31Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited
9. 32Our operating results may be harmed if we are required to collect or pay incremental sales, value-added, or other related indirect taxes for our services or in jurisdictions where we have not historically done so
10. 33Our results of operations and financial condition could be materially affected by the enactment of legislation implementing changes in the U.S. or non-U.S. taxation of international business activities or the adoption of other tax reform policies88% rewritten
11. 34Other changes to U.S. or non-U.S. tax laws could increase our liabilities for taxes, interest and penalties, lead to higher effective tax rates, and harm our cash flows, results of operations and financial conditionNew

Risks Related to Legal and Regulatory Compliance

1. 35We are subject to a variety of U.S. and international laws that could subject us to claims, increase the cost of operations, or otherwise harm our business due to changes in the laws, changes in the interpretations of the laws, greater enforcement of the laws, or investigations into compliance with the laws
2. 36We are subject to export and import control laws and regulations that could impair our ability to compete in international markets or subject us to liability if we violate such laws and regulations
3. 37Our actual or perceived failure to comply with privacy, data protection, and information security laws, regulations, and obligations could harm our business
4. 38We also expect that there will continue to be new laws, regulations, and industry standards concerning privacy, data protection, AI, and information security proposed and enacted in various jurisdictions
5. 39Some countries are also considering or have passed legislation implementing data protection requirements or requiring local storage and processing of data, or similar requirements, that could increase the cost and complexity of delivering our services
6. 40Our business could be adversely impacted by changes in internet access for our users or laws specifically governing the internet
7. 41We are currently, and may be in the future, party to intellectual property rights claims and other litigation matters and, if resolved adversely, they could have a significant impact on our business, results of operations, or financial condition68% rewritten
8. 42With respect to the Entangled Media Litigation, trial is currently set for September 8, 2026. Any final judgment in the district court may be appealed by either party to the Federal CircuitNew
9. 43Our failure to protect our intellectual property rights and proprietary information could diminish our brand and other intangible assets

Risks Related to Ownership of Our Class A Common Stock

1. 44The trading price of our Class A common stock may be volatile, and you could lose all or part of your investment
2. 45The multi-class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the completion of our IPO, and it may depress the trading price of our Class A common stock
3. 46The market price of our Class A common stock could decline as a result of a large number of sales of shares of such stock, and the perception that these sales could occur may also depress the market price of our Class A common stock, particularly if those sales are by our officers and directors and their affiliates
4. 47Transactions relating to our 2026 Notes and 2028 Notes may dilute the ownership interest of stockholders, or may otherwise depress the price of our common stock87% rewritten
5. 48Nevada law and provisions in our articles of incorporation and bylaws, could make a merger, tender offer, or proxy contest difficult, thereby depressing the market price of our Class A common stockNew
6. 49We cannot guarantee that our stock repurchase program will be fully implemented or that it will enhance long-term stockholder value48% rewritten
7. 50We do not intend to pay dividends or other distributions for the foreseeable future

General Risk Factors

1. 51Our business could be disrupted by catastrophic events
2. 52We may have exposure to greater than anticipated tax liabilities, which could adversely impact our results of operations46% rewritten
3. 53If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
4. 54Our reported results of operations may be adversely affected by changes in accounting principles generally accepted in the United States
5. 55We may need additional capital, and we cannot be certain that additional financing will be available on favorable terms, or at all
6. 56Our Class A common stock market price and trading volume could decline if securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business