Dropbox (NASDAQ:DBX) reported third-quarter earnings that exceeded analyst projections, but the revenue growth slowed to under 1% year-over-year. The cloud storage provider posted adjusted earnings per share of $0.60, surpassing the expected $0.53, with revenue of $638.8 million, marginally higher than the $637.23 million forecast. However, revenue rose just 0.9% compared to the previous year, highlighting a sluggish growth phase.

CEO Drew Houston acknowledged that the company remained in a “transitional period,” grappling with ongoing challenges in 2024. Annual recurring revenue increased by 2.1% year-over-year to reach $2.579 billion, while the number of paying users inched up to 18.24 million from 18.17 million a year prior.

Despite the slower revenue expansion, Dropbox reported an improved adjusted operating margin of 36.2%, up from 36.0% in the prior year, and free cash flow climbed to $270.1 million from $246.5 million.