And I wouldn’t say there was much change in the macro trends.
Timothy Regan: Yes, just to briefly add on. So as you know, as related to our Teams, most of our Team’s plans are in the SMB space. As Drew was mentioning, we do continue to see a challenging demand environment. And we see this really reflected in downsell pressure as teams trim their license counts following layoffs or budget cuts. And we’re seeing this particularly pronounced in the tech and manufacturing verticals.
Richard Hilliker: Got it. Okay. My follow-up, sir. I guess, Drew, you hit on awareness of all the things that Dropbox does is still an issue. But we [indiscernible] leverage on the line this quarter. So I guess my question is, why not more efficiency from R&D instead of the sales and marketing line?
Andrew Houston: Yes. So we’re certainly mindful of spend in R&D. I mean there are a lot of investments we’re making across the portfolio that go into that, both in our core business or our whole product portfolio, our infrastructure, investments in AI, things like Dash. There are a lot of investments there that we’re making that we’re excited about. And then to your point around kind of light on sales and marketing as a percent of revenue compared to other companies. I mean that’s really because of our product-led growth motion and the efficiency. It drives a lot of efficiency in terms of OpEx in sales and marketing, but what we’re really saying is like we’re using the product to automate a lot of those activities, which is really scalable, but then shows up as in the R&D line.
So I mean we’re — we optimize across both. But we see a lot of returns to the R&D side just because we have such a large audience and even small improvements to some of these funnel metrics have a big impact, as opposed to more like paid acquisition investments or having more — having bigger teams in sales and marketing.
Operator: And our next question will be coming from Matt Bullock of Bank of America.
Matthew Bullock: I’m on for Mike Funk. Great to hear about the better performance of the Document Workflow business. I think it’s the first time in a while we’ve heard positive trends there. Curious what drove that? And if you think that the onward trajectory is going to go forward through 2024?
Andrew Houston: Sure. Yes. That seems like broadly in line with our expectations. I wouldn’t say it was like this mega positive surprise or anything. But I agree, it’s good to see more stability there after — in the bigger picture is a huge COVID peak and then pulling back in all areas, but then a particular pulling back in Document Workflow as you look at something like DocSend so much of their business is coming from founders fundraising and in a more challenged fundraising or venture capital environment. DocSend was impacted. So overall, it’s good to see more stability there. So I’d say there’s still incremental opportunity. But as I was just saying earlier, in the bigger picture, we see the biggest upside with optimizations to our Teams business and future directions like Dropbox Dash.
Timothy Regan: And Matt, real quick, this is Tim. One specific to call out maybe FormSwift where we did see an increase in FormSwift in both usage and top of funnel activity in the first quarter, and that’s due to tax season. So that leads to an increase in subscriber numbers.
Matthew Bullock: Really helpful. And then one more, if I could. It seems like there’s a lot of moving pieces on the ARPU side with the pricing changes, Bundling and Family Plan deposition. Just curious how we should think about modeling throughout the remainder of ’24?
Timothy Regan: Sure. So there are a lot of moving parts, as you mentioned. But for the full year, we expect a modest lift in ARPU, largely driven by the adoption of our premium plans.
Operator: [Operator Instructions]. Our next question will be coming from Patrick Walravens of Citizens JMP.
Patrick Walravens: Andrew, can I ask a really big picture question here? Which is just — we help you take public . We help you take public 6 years ago, it was at ’21. The stock is basically in the same place — up a little bit. You control 75% of the votes. So in the end, it’s really up to you. So I’m just wondering, is it time to consider more radical changes in Dropbox to drive shareholder value? And what could those changes be?
Andrew Houston: Well, I think I’m really excited about what we’re investing in. So a lot of what I shared with Dash. I mean it’s still a product that’s in beta. We haven’t even fully turned it on yet. We talked about some of the R&D investments or really we’ve done a lot in the last year or 2 to reposition the company towards AI and all your cloud content. And I think there’s a lot of room for improvement in the knowledge worker experience and even in even in the Dropbox world. I think a lot about when — what does it look like when you open your laptop in 2030 and get your work stuff, I think we can do a lot better, than the experience we all have today. We’re on one side of your screen, it might be a bunch of stuff in your finder window or your file explorer and that experience hasn’t really fundamentally changed since like 1984, since it was first introduced with the Macintosh.
And on the other side of your screen, you’ve got like a Chrome browser window open with 100 tabs that are like too small to even show text. And yet, this is like how we manage our most important information at work. And it’s pretty hard to do knowledge work without the knowledge in front of you. So I’m very excited for — the reason I’m still here is because I see a huge opportunity that is not unlike the one I started with, where I’m like at the beginning, I was like “why am I carrying on a thumb drive. This is crazy. Why am I e-mailing myself files. This is crazy. There’s got to be a better way to do this” And to 17 years later, we’re — a lot of ways solving the same problem like my stuff is everywhere. I can’t find it. A lot of things have changed.
What used to be 100 files on your desktop, there’s now 100 tabs in your browser. But everyone is kind of dealing with this mayhem without good solutions from anyone. So what really gets me excited is the opportunity to really change how people work, the way we did in the beginning. And so there’s no shortage of things to be excited about. Now obviously, as a public company, we’ve been getting our sea legs over the past 5, 6 years, obviously, to be in a flattish place is not where we want to be. But I’m really excited about our investments. I think we’ll — the picture will look pretty different in the future.
Operator: And our next question will be coming from Mark Murphy of JPMorgan.
