SAN FRANCISCO - Dropbox Inc. (NASDAQ: DBX ) reported third-quarter earnings that beat analyst estimates, but shares fell sharply in after-hours trading as revenue growth slowed to less than 1% year-over-year.

The cloud storage company posted adjusted earnings per share of $0.60, topping the consensus forecast of $0.53. Revenue came in at $638.8 million, slightly above expectations of $637.23 million but up just 0.9% from a year ago.

"As we've shared over the last year, we're in a transitional period as a company and we continue to face a challenging environment in 2024," said Dropbox Co-Founder and CEO Drew Houston.

The company's total annual recurring revenue grew 2.1% year-over-year to $2.579 billion. Paying users increased slightly to 18.24 million from 18.17 million a year earlier.

Dropbox's adjusted operating margin expanded to 36.2% from 36.0% in the prior-year quarter. Free cash flow rose to $270.1 million from $246.5 million.

The company said it recently announced workforce reductions to increase efficiency in its core business while accelerating growth in new initiatives like Dropbox Dash . Management plans to provide forward-looking guidance on its earnings call.

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