Good afternoon, ladies and gentlemen. Thank you for joining Dropbox’s Second Quarter 2019 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. 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 this call. I will now hand the call over to Darren Yip, Dropbox’s Head of Investor Relations. Please go ahead.

Thank you. Good afternoon and welcome to Dropbox’s second quarter 2019 earnings call. Today, Dropbox will discuss the quarterly financial results that were distributed earlier. Statements on this call include forward-looking statements, including statements relating to the expected performance of our business, future financial results, strategy, long-term growth and overall future prospects. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those projected or implied during this call. In particular, those described in our Risk Factors included in our Form 10-Q for the year ended March 31, 2019 and the Risk Factors that will be include in our Form 10-Q for the quarter ended June 30, 2019 . You should not rely on our forward-looking statements as predictions of future event. 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 on 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 at investors.dropbox.com. I would now like to turn the call over to Dropbox’s Co-Founder and Chief Executive Officer, Drew Houston. Drew?

Thanks, Darren. Good afternoon, everyone, and welcome to our earnings call. On the call with me is Ajay Vashee, our Chief Financial Officer; Yamini Rangan, our Chief Customer Officer, will also join us during Q&A. Today, I’ll talk about our business and product highlights and the continued expansion of our ecosystem. Ajay will review our Q2 financial results, touch on our go-to-market strategy and provide guidance for Q3 and fiscal 2019. In Q2, we delivered strong results across our business. Revenue grew 18% year- over-year, driven by paying user growth and ARPU expansion. We also generated robust margins as we continue to deliver balance of both growth and profitability. These results continue to demonstrate the strength of our global collaboration platform or efficient go to market strategy and our operational discipline. First begin with our product update where we had a number of exciting announcements. We Q2 we unveiled the new Dropbox, we believe that there is a lot of room for improvement and the experience using technology at work and we think the new Dropbox can help make that experience a lot better for our users. As while there are new tools and productivity apps are meant to help us work better together, the reality is that are creating new problems too. Having all these new tools means our content is now scattered in all these different places. We have to keep toggling back and forth between the different apps and teams have a hard time staying coordinated and it's hard to figure out who should be doing what. And while we have a bunch of new tools, a bunch of the old ones were using haven't really changed. The way we interact with files on your computer today hasn’t really changed in 30 years. The file browser on…

Thank you, Drew. Our Q2 results demonstrate our strong execution and focus on delivering a healthy balance of top line growth and profitability. Total revenue for the quarter was up 18% year-over-year to $402 million driven by an increase in total paying users at ARPU expansion. We ended Q2 with 13.6 million paying users. ARUP was $120.48 in Q2 up 3% from $116.66 a year ago. The year-over-year ARPU expansion was primarily driven by strong adoption of our premium, professional and advanced plans by new paying users. There is a modest sequential headwind to ARPU in Q2, driven by the timing of some larger outbound deals. I note that given the investments we are making in the business from both the product and go to market perspective, we remain confident in our ability to drive continued ARPU growth for the remainder of 2019. Let me highlight a few ways were executing on a strategy. First, we continue to optimize our plans and pricing to ensure we deliver the best value proposition for our users and our business. As Drew mentioned in his prepared remarks, we recently announced a number of new product features across our subscription plans and with the additions we made to our plus plan we raise the price of SQ by approximately 20%. We remain committed to generating value where we are delivering value to our users and believe that the expanded feature set across our individual plans will enable our customers to continue doing their best work with Dropbox. Moving on to HelloSign, we've made great progress in integrating the Company into our go to market efforts. In Q2, we began offering 24x7 supports for all of HelloSign's enterprise SKU customers globally. We also began testing a series of in-out marketing campaigns designed to drive awareness…

Thank you, Ajay. We're operating the new best of breed ecosystem where people bring the tools they want to work into world that’s fragmented, not just across tools, but across content and teams. We see an opportunity to bring everything together and with the new Dropbox that's what we've done. We're committed to our mission of designing more enlightened way of working. And I'm really excited about the future we're building. I also invite you to hear more about that feature at Dropbox's First Analyst Day as a public company on September 25th here in San Francisco. Details will be available soon on IRR website. And with that, I'd like to invite Yamini, our Chief Customer Officer to join Ajay and me for Q&A. Operator?

Thank you. [Operator instructions] Our first question comes from John Difucci from Jeffrey. Please go ahead.

Hi, this is Howard Ma for John. Thanks for taking the question. Drew, so, you've mentioned a lot of neat features that are part of this new Dropbox Experience and it is so including like smart sync and the ability to restore deleted work. I guess you call it quick actions. So, I am still wondering, what are these functionalities do you think will become really table stakes in the near-term because a lot of these features are things that we're increasingly used to in our mobile and in our daily lives? And within the greater philosophy of spend, R&D has been kind of inflated overtime. We know it's come down, so how do you think -- how do you think about how do you manage spending in R&D versus go-to-market for samples? Thanks.

Well, first, I'd say probably the highlight from a product standpoint was. We launched an entirely new desktop app. So what we call the new Dropbox, which is the biggest change we've ever made to our product. And so I mean, smart sync has been a great feature we've had for a while. It's something that drives conversion to our pay plans and it's something that we moved into our plus plan last quarter. We'd say the highlights are much more about how we've turned Dropbox from this a metaphor from a magic folder to more of a magic workspace. And the big improvements on the product front, which I think are important. There a lot of questions you're asking are, we're solving a much bigger problem for our customers because we found that people are really all of us are suffering from information overload at work and that our the experiences incredibly fragmented. And we re-imagine the Dropbox experience to be this to become a living workspace with a couple of advantages. So, first is moving beyond files to any kind of cloud content. So, you can have Google Docs next to your PowerPoints, next to your Trello boards, really everything you need with your projects, and we're definitely the only company that does this in a native experience. And second is turning Dropbox from a place where you put content when it's done to a workspace you're living out of all day. And so being able to not just see the content and the files and final content, but be able to see other people and activity, see what's going on people Slack people from the Dropbox app, being able to start a Zoom meeting. This is a much more engaging experience and it's still an early access but we're really excited about. And so, I'd say this is pretty transformative product change because what we find maybe where we started was the problem we're solving and people forgetting the thumb drives and things like that. But now the problem you see at work as a much higher value one, which is helped me organize my working life across different ecosystems and tools. And so, it's actually been a great product and quick, we're on the product front. I think that reflects some of the investments we've been making on rd and R&D front. We don't expect our levels proportionately to change very much.

Yes and this is Ajay. I can give a little bit more color on the second part of your question. At a high level, we certainly remain committed to driving efficiency across the business and that includes R&D. R&D spend in Q2 I would just remind includes additional expenses from the integration of HelloSign as well as overlapping facilities related expenses for both our existing and new corporate headquarters, neither of those were included in our financials a year ago. And at a high level, we invest across three major categories in R&D. One is the new product experiences like the new desktop apps that Drew just talk to. We also invest in the whole lot of machine learning and intelligence initiatives that we call DBXI. We also invest in our conversion engine, our self-served conversion engine that spent, that's team fits in R&D for us. So, a lot of data science initiatives and optimization of conversion and boarding flows, and then finally, we're also investing in infrastructure, and this is an area where we're focused on driving continuous innovation and announcement that we made around SMR and our cold storage tier are examples there.

Yes. Just I should just to follow up on which parts still will become table steaks. I'd say, we're very differentiated from other products in our stage at this point. You're not going to see Google Doc support in one drive anytime soon.

Our next question comes from Heather Bellini from Goldman Sachs. Please go ahead.

This is Dan Church on for Heather Bellini. Thanks for taking the question. I was wondering if -- a couple of quick questions for you. With respect to the price increase in May, can you give us some color on how churn has been relative to your expectations? And then with respect to ARPU growth, can you help us impact the drivers a little bit and help us understand the magnitude of what's ARPU for new customer adds relative to the installed base? And how much room is there to run? And then lastly, how do you think about your ability to raise prices over time?

Sure, this is Ajay. I’m happy to take a stab at those questions. So, we can start perhaps with some more color on the reprising and packaging of our plus SKU and our individual plans. As a quick reminder for those in the call, we recently announced a number of new product features across our subscription plans, and with the addition that we made to our plus plan, we raise the price of that SKU by approximately 20%, and we really want to expose more of our users to our platforms capabilities and the repackaging of our individual pay plans is away for us to do this. The changes at the high level are being received really well. The features of plus plan work upgraded in June and existing subscribers began renewing at the higher price points in July. That process will continue for the next two quarters. Based on the rebuild cycles of our annual subscribers and I will say as it pertains to the numbers and our guidance to baseline forecast around our pricing and packaging efforts was included in our guidance last quarter and our latest outlook further incorporates positive early signals related to both conversion and churn. In fact, we thought churn improved across our business in Q2. And then to answer the second part of your question around ARPU growth going forward, we do continue to see a wide variance between gross new ASP and ARPU certainly a lot of headroom there and this most recent pricing and packaging initiative will also increase and the variance servicing gross new ASP and ARPU. So, we have a ways to go there. I think part of that question probably interesting with just around the sequential ARPU that we delivered in Q2 relative to Q1. And I will just make a quick note on that, that modest sequential headwind to ARPU that we saw in Q2 really driven by the timing of some larger outbound deals, as well as some FX headwinds in the period net of those two items, we would have seen ARPU expansion in Q2. And looking ahead, just to reiterate, we are very confident in our ability to continue to expand ARPU over the course of the year, tailwind from strong adoption of our premium professional events skews by new end users and early success from our plus SKU re-pricing and repackaging initiative. And then the final part of your question around price increases, a little early for us to comment on future initiatives, though, I will say that we will continue to evaluate and refine our pricing and packaging approaching the future, just like we have in the past.

And then I just had a really quick follow-up, deferred revenue growth was, I think 11% of the quarter behind vine revenue growth 18%. Anything to call out there is it just makes it monthly billings versus annual?

And that's a large part of it. And as I mentioned previously, while billings and deferred revenue are related to revenue growth, they're not consistently predictive of revenue for us. And I think that's actually pretty apparent with the revenue guidance that we issued for Q3. And just as a reminder, in a given quarter, there can be various items that can drive billings growth higher or lower, that don't directly correlate to revenue. For example, addition to our deferred revenue balance, as you noted, are highly sensitive to the mix between monthly and annual subscribers. So small changes and mix shift can skewed for revenue and that results in deviations between billing and revenue FX can also impact billings in a meaningful way, as billing are more sensitive to FX movements relative to revenue. So normalized for FX billing flowing through Q2 would have been about 2 percentage points higher. And I would note that going forward we expect to see billings growth accelerate in Q3, as a result of the success we've driven with our recent growth initiatives.

Our next question comes from Richard Davis from Canaccord. Please go ahead.

Hey, t hanks very much. It's good to see the forward looking interesting good. Quick question for you, you've partnered with like some of the really great collaboration tools obviously, the Slacks and the Zooms and things like that. Talk to us a little bit or just fill us in on like your viewpoint, if you're using other tools, whether using teams or using other systems? And how do you think about that in terms of your product roadmap? And how you make that that part of the experience for those who don't use the cool stuff yet?

So, broadly we see, Dropbox and communication tools or the other tools that are that we integrate with us top on their use cases. And we see from our customers, where they struggle with is the need to toggle back and forth between all these different apps or that the data their work or a project is scattered in all these different places. And so, particularly the new Dropbox, we see our role as bringing it all together. And so the -- deep integrations, in many ways make Dropbox more usable and they make Slack more useful because you can send someone a Slack message from Dropbox or you can start Zoom meeting from Dropbox. And that wasn't possible before then, before we launched in June. And to the second part of the question about, what our folks have adopted these yet, and we see Dropbox as being a potential on ramp for use of these tools, and then seeing some Dropbox extensions launch in Q4 that sort of a broader platform. The new Dropbox bodes offers more surface area to engage with those kinds of integrations and extensions, and already our Dropbox extensions have driven use or driven adoption over a lot of those partner apps. So we broadly see the experience the new Dropbox and desktop approximately as an opportunity to drive a lot more engagement generally and drive engagement more partnerships and solve a problem that you see no one really solving which is how do you pull all this together?

Thank you. Our next question comes from Mark Murphy from JP Morgan. Please go ahead.

Coming off of Q2 and given that your increasing the 2019 revenue guidance and you are increasing it by more than it did last quarter. Directionally, how is your confidence moving in your ability to curve the rate of revenue deceleration by Q4 or by the end of year, and then to try to stabilize that and head into 2020 with structure for consistent compound growth as I think you commented on in the last couple of quarters?

Great questions, Mark, this is Ajay happy to answer them. I would say the high level we continue to have a very large opportunity ahead of us and we're doing more and more to unlock that opportunity through investment and products in our ecosystem conversion engine as well as through M&A. And longer-term our philosophy is consistent with what we talked in the past. And that's that will continue to be focused on delivering leading growth and profitability were certainly structuring the business for consistent growth and continued margin expansion at scale you seen us guide to that now with respect to Q3 and Q4 guidance and will have more specifics to share on 2020 when we formally issued guidance on our call in Q1.

Thank you, Ajay. Just as a quick follow-up. Is it possible to quantify the sequential ARPU impact from what I think you describe as some larger outbound deals, which I’m assuming much include later in Q2?

We have some large deals that close later in the quarter. We also saw some FX headwinds in the period, and what I can say is net of those two items, we would have driven ARPU expansion in Q2. The second thing I can say is, if you look at gross new ASP effectively ARPU for new paying users, that metric group in the period as it has in every prior periods as we've gone on public, and that continues to lead ARPU by meaningful margin. So certainly the head room is there and continued to be there for us to continue to drive ARPU extension.

Thank you. Our next question comes from Jason Ader from William Blair. Please go ahead.

I’m curious as to when, Drew, we might know about whether the new Dropbox is really making a big difference moving the needle on your business? How long do you think it will before you guys know and then we know?

We look at a variety of indicators inputs when answering that. First, we're really happy to see that our launch really resonated with customers in the press and analyst in that word addressing. And then second we're really happy with new Dropbox itself, we think it solves a lot of new problems but more your question, how will I move the needle and now our focus is to driving adoption. So in June, we launched new Dropbox, it's in early access are so it's not broadly rolled out to audience you will hear more about that throughout the rest the year. And we certainly want to roll it out to as many people as possible, but we have to be thoughtful to how we do that, some major change to the experience. And when you make a change to a product that need to be communicated well and do that respectfully. So that’s all be focused on in the coming quarters. And for sure we will be making the new Dropbox much more broadly available.

And in terms of the adoption, are there some specific things that you can talk to? And how you are going to roll this out? Is it going to be first with the team side of the business? Is that how you are thinking about it?

So, we're -- I mean, we're already letting in new cohorts and users, and so people can opt into it on our website. But as far as broader rollout, I mean, we're striking a balance. Obviously, we want to get it out to as many people as possible. But it's but it's really important to do that migration well, because again, whenever you massively change the experience of products and technology, like people, initially you're kind of taken aback by that. And so, we want to help introduce the new functionality people in the right way. Importantly, also, anyone who was using Dropbox a certain way yesterday will still be able to use it that way tomorrow. So for continuity, we're not taking anything away or anything or not a gamble on that dimension, but we just want to make sure that we do some one time work to educate people as to as to what we're offering, and then it's a bit of a mindset shift we're thinking about Dropbox, again, not just for a place for files, but place for all your cloud content and a living work spaces that we hope is one of the first apps you open the morning unless once you close the night. And, what we're paying attention to right now is just that really signal from customer and has been positive, so both qualitative response from early users, and then also metrics we look at like engagement per user, those things are all trending in the right direction. So you'll hear a lot more about them coming course.

And one quick housekeeping for Ajay. What was the FX impact to revenue in the quarter and then is there any impact to this full-year guide from FX?

Yes, good question. So, the impact to revenue in the quarter from FX roughly a 1.5 point headwind in the quarter and that's about the same for our Q3 guide. So, constant currency would add about 1.5% to the growth rate in Q3, and for the year about 1%. So, constant currency would add 1% towards the growth rate guide for the year.

Thank you. Our next question comes from Justin Post from Bank of America. Please go ahead.

Hey, this is Shaun Hannon for Justin. I am wondering a little bit, if you can unpack the subscriber net ads in Q2? I know you said, what enterprise deals at the end of the quarter, but are you guys seeing higher win rates on the enterprise side? And how can you compare that through to the consumer side and individuals here?

Sure, this is Ajay. I can take the first part of your question and I will pass it over to Yamini. I will say in any given quarter, we always close the number of larger deals in addition to a large volume of licenses through our self-through of growth engine, which is the primary growth engine for Dropbox, and this quarter was really consistent on that dimension in aggregate. And then Yamini will share more color.

Yes, I think in outbound side, we had another quarter of really solid performance and a number of notable wins that Ajay talked about earlier during his remarks. What is critical here is that our motion is very efficient and continues to be efficient, and this quarter we saw wins in healthcare and education in tech and broadcasting the land and expand motion is something that we are paying particular attention to and is working well. So, we want a 1,000 feet enterprise deal with an European broadcasting company, which originally began as organic adoption. And then partners healthcare, which Ajay talked about, that's started as a smaller 20,000 feet deal and now they are expanding their usage with enterprise queue and with significantly larger number of domains. So, the investments we are making in scalable, efficient data driven model within outbound is working and the land and expansion motion is also really working well, and so we continue to see that good performance in Q2.

And then last question I guess would be, just want to re-ask that question on the plus tier churn. I think the street is really looking for a sort of consistent net ads in second half. I want to get a better sense of what you guys are seeing and I think it makes up the majority of yourself, so anything you can give us there will be greatly appreciated?

I will just reiterate, this is Ajay, a couple of points there. One that we did include a baseline forecast around what we expected from a pricing and packaging efforts last quarter in our guidance, our latest outlook incorporates some really positive really signals related to both conversion and churn that we're seeing and the second thing I will say we provided some color and churn back when we went public last year. Directional churn is been very stable for us instead. I did in fact improve across the business in Q2, so the rate has improved.

Okay on last one if I can, I just want to get a signal on the enterprise side it seems like there is little more closure this quarter on what the pricing looks like, relative to the other tiers and teams advance and standard on a per subscriber basis?

So, it's negotiated pricing for our enterprise SKU and so. It depends on the customer and the kind of deployment that were targeting with that customer. We are very disciplined about how we manage margins with these larger deals and so my team works closely with Yamini's team. And I’m not sure Yamini do you want to add any additional color.

I think on the enterprise side like we mentioned there are number of verticals where we're seeing momentum. We talked about CUNY, this is again a vertical in terms of education where we're seeing good momentum, we had a number of used cases for faculty staff and we're seeing adoption on the student side as well. And University of Sydney, CUNY University of Florida, these are all examples where education verticals is actually adopting Dropbox. And then in terms of ARPU it is pretty similar to what Ajay said, it is negotiated it really depends on the deal but overall it is reflected in the comments that Ajay made in terms of ARPU growth in the future.

Our next question comes from Karl Keirstead from Deutsche Bank. Please go ahead.

Question for Ajay, Ajay back on the plus price changes could you give us a little bit of color maybe you will elaborate at the analyst day but what is the conversion timing look like over the next 12 months. Maybe just in broad strokes what's the mix of conversion that’s likely in the second half of 19 versus first half 20, I guess the context here maybe you can figure out I’m just trying to understand if we do see a change in turn or ARPU as a result of the plus price change just trying to be a little bit more specific as to when we would see that?

It’s a good question and we can certainly provide more detail and the Analyst Day in September, but at a high level, the features of our plus plan were upgraded in June. And so new conversions the plus plan we're converting at a higher price point, beginning in June, existing subscribers began renewing at the higher price points in July. So last month and that process will continue for a 12 month period for the next few quarters and that's based on the cycles of our annual subscribers and we can provide a little bit more color on the ins and outs and how that flows into the numbers at our Analyst Day.

Got and then maybe second Ajay just on the margins I remember a couple of quarters ago, when you set the margin arc for this calendar year. It sounded like first half little bit weaker, second half stronger. So the 3Q guide of 11 to 12 is a little bit better than you put up but not a big jump it looks like it's a little bit more 4Q skewed, is there anything occurring in 3Q that might have been weighing operating margins a little bit versus the guys that you are thinking about a quarter or two ago or quite similar.

Quite consistent similar just from the internal perspective here and what we've been driving towards. I can say at a high level, we're absolutely focused on balancing growth and profitability and remain committed to driving margin expansion. As it relates to your question specifically, in Q3, we are reserving some flexibility to spend on product adoption and marketing initiatives related to the new desktop application that Drew was talking to, and that includes our upcoming user conference in late September. But I would note that for fiscal '19, the midpoint of our operating margin guidance would be about 14%. That's net of non-recurring facilities, and HelloSign related expenses. So that's up about 2 points year-over-year and our implied guide for Q4, as you noted, signals that we plan to drive pretty meaningful sequential and year-over-year margin expansion as we exited the year and that's, that's consistent with what we previously indicated.

Our next question comes from Rishi Jaluria from D.A. Davidson. Please go ahead.

Hi guys. This is Hannah on for Rishi. Thank you for taking my questions. First off, I was wondering, if you could talk about how the community's algorithm performed in the quarter? And if you could quantitatively speak to the success you've seen with selling to what you've identified?

It's for folks that don't know how to use community's algorithm, we use data science in general to drive adoption as well as identify the propensity of our users to buy. So typically, the motion works with landing 50 to 150 deals. And when we look at those 50 to 150 deals, it is driven a little bit by the conversion algorithms as well as the algorithms that identify the community. So, it continues to do well. That is how we have such a scalable, efficient and data driven outbound sales motion. Now from there, what we really are focused on is driving broader adoption within those teams, and that's the success that you've seen in Q2 with partners health care with other, outbound wins that we mentioned. So, it starts with the communities type algorithms, there are multiple of those algorithms that we use to look at the propensity of our teams, and then we leverage our outbound sales people to go target those and then we continue to drive adoption through engagement. So, the overall motion, the overall systems of different algorithms are working well and we are pleased with the progress.

And then, could you talk about the effects you've seen from the three device limit on Dropbox Basic? And as you've seen a lot of conversions from free to paid in the quarter?

This is Ajay. So, we don't break down the impact of a specific initiative. Certainly, the three device limit initiatives that we launched earlier this year is a good example of how we drive investment in product driven conversion and our up-sell through ML and data science. And it certainly is a driver of conversions for us, but we manage our growth initiatives as a basket and as a pipeline and that's one of many initiatives that we launched over the course of the year that's having an impact on the business.

Thank you. Our next question comes from Chris Eberle from Nomura. Please go ahead.

Could you give us some idea of what the implied ARPU impacts from the price increases for Q3 and Q4?

Yes, this is Ajay. So, we'll have some color we can share as part of our Analysts Day in September. I can say at a high level, we do expect the tailwinds to ARPU from the plus repackaging and pricing initiative. The primary driver of ARPU extension for us over the last few quarters has been higher adoption of our premium plans by new paying users. So folks that are converting to our professional plan and folks that are converting to our advanced skew at higher and higher rates and that tailwind is going to continue base visibly that we have for the remainder of 2019 as well. So you'll see both of those factors driving some pretty significant ARPU expansion for us across Q3 and Q4.

Got it. And just one other one. When you guys think about your balance growth throughout the year or even in the next year, I think there's been a pretty big disconnect between the number of net paying subscribers and in registry that I think the street come down to 200,000 to 250,000 and you guys consistently keep putting up that 400,000 number? How should we think about the balance between those two? Is there a miscommunication between what balanced is here? Or is there something more to that?

They are both important. This is Ajay. They are both important levers to us and you will see us we entered both in varying degrees based on the initiatives that we're shipping in the given quarter and how we are managing those initiatives. There has been a fair amount of consistency in the net new paying user ads that we've driven over the last few quarters. That's certainly not been that’s been intentional. It's been results of the basket of growth initiatives that we funded and we launched. And there's been some variability in the expansion rate of ARPU as well and that really depends on what's in the pipeline, what we're graduating out of the experiment pipeline into a live initiative. And so, I think you will see both levers be important for us going forward you'll see us to execute against both but you will see that rate of expansion vary quarter to quarter based on what's happening with the business.

Our next question comes from Mark Mahaney from RBC Capital Markets. Please go ahead.

Great thanks. It's Zach Schwartzman on for Mark. Drew, can you talk a little about the difference between rolling out an improved product towards the consumer or less tech-savvy market versus I guess, a developer market? Part of the reason why Dropbox has become so successful today was the ease-of-use for the everyday individual original Dropbox. Do you think this change, product change, could have as much natural virality as the original Dropbox? And what type of headwinds that you foresee? And do you think of ways to proactively affect engagement of this new UX?

Thanks Mark, while I think first we're focused on the end user and I make that distinction because we certainly want consumer type ease-of-use that is certainly what has gotten us here. But importantly, we're not focused per se on consumer use cases compared to use cases that folks at work and folks collaborating in teams like that certainly our sweet spot that 48% subs are using Dropbox at work, and we think the best experiences when you are using Dropbox in the team when using at work. So -- and we made good progress and in terms of that strategic focus over last few year's which reflected in all the numbers. And so, the new Dropbox is kind of product we would've built, if we had been focused on these used case in the beginning. So, historically, we've been kind of --Dropbox is operated behind the scenes, there has been sort of in the background, in the file system, you're just navigating folders on your desktop, whereas with the new Dropbox, you have a dedicated app, again I said it's much more workspace instead of just a static list of files you see people when you see comments, and you activity and all the things you expect in a real-time collaborative app. We think it is a very different generationally different experience from what other folks have. So and then as you're alluding this is a new foundation for engagement for virality for all the kinds of metrics that we want to drives and for because conversion now that we have this foreground surface that we entirely control as opposed to being limited by the operating system. So it's a lot easier for us to drive adoption of things like team for HelloSign, when we can have a button that says send out for signature within Dropbox natively, as it were, as we couldn't really do that in the operating system. And so the ability to drive adoption, generally of the new Dropbox in, especially for the viral adoption of the new Dropbox, because it is much more powerful levers there. Overtime, we think there's much more powerful little levers to drive distribution of, of apps like ours and our partners apps. And we think there's a much better surface to drive conversion. So when you're actually sharing something being able to highlight in line, the benefits of having a paid plan. We think the new Dropbox is essential. It drives the monetization even though we're rolling it out. We used to have to explicitly pay for our basics. Users will be able to use the new Dropbox as well. So all of what I described will take place overtime, but it's an entire nation we're really excited about.

We have time for one last question. Our last question comes from Pat Walravens from JMP Securities. Please go ahead.

Drew, maybe this is for you. But what is the idea of customer look like for the new Dropbox? I mean, they're at work and they work in teams, but that's for lot of people. So what do you think was the best profile at customers for you guys for this new product?

Sure. I mean, I think it's the it's always the same sweet spot as we've had in the past and then in many ways, we're also following customer demand, and then a lot of the ideas we had for the new Dropbox came from observing how our customers work and the pin points they experienced in this new environment, which is, on the one hand, there's there are always new tools for experiences a lot better on some dimensions, but there's also this new problem, which are things that a lot more cluttered and fragmented, and there's this information overload and distraction that people are dealing with. So, we have a different philosophy in terms of are -- we see our role as organizing your working life across all these different tools, and ecosystems, and we think that's something that every information worker needs. More granularly, we focus on both you personally as an information worker and your personal productivity. We also focus on the manager or the owner of a team so if you have a group of 10 people you're working with, we certainly think about that. And importantly, even in a 10,000 person company, that it's composed of a lot of little work groups and units, and even executives or a CEO still manages a small team and as an information worker themselves. So, we think that for me -- so, we think that our sweet spot remains the same I mean, really targeting information workers generally the value prop, to the end user might really be about collaboration and personal productivity for a team manager might be more alignment and how do you get your team on the same page and executing well. And for an executive, it might be more like how do I get a better return on my cognitive capital, how do I free up my from my employees from having to do obviously the work or toggle between those different apps and help them focus. So and I've done a whole bunch of stuff on the IT side as well as have people wrangle all the complexity that's happening on the back end too. So -- but we think all of this is the beginning of really interesting, so much bigger problems and collaborations -- and new problems and collaboration that we didn't see our industry focused on.

Thank you.

All right. Well, thank you, everyone, for joining us today. We really appreciate your support and look forward to speaking with you at our Analysts Day in September.

Thank you, ladies and gentlemen for attending today's conference. This concluder's our call. You may all disconnect. Good day.