Dropbox (DBX) faces deteriorating revenue growth fundamentals due to pressure on the core file sharing and synchronization business, as well as negative demand signals for its new Dropbox Dash AI product, UBS Securities said.

The brokerage said in a Wednesday research report that it modeled a revenue drop of 1.2% in 2026, 0.9% in 2027, and 0.2% in 2028, citing declining net paying users for FormSwift, the impact on the FSS business since the company scaled back sales initiatives, and nascent monetization of its AI product in 2025.

Channel checks revealed that FSS spending trends in 2026 will remain muted. Ancillary products like Sign and DocSend are currently not major revenue drivers, according to the note.

Feedback from customers signaled that retention was high due to Dropbox's features and user experience design, but there was minimal indication that they are interested in moving to higher-priced plans, the analysts wrote.

UBS downgraded the stock to sell from neutral and cut its price target to $27 per share from $29.

Shares of Dropbox were down 1.6% in recent Thursday trading.

Price: 31.19, Change: -0.49, Percent Change: -1.55