Dropbox is letting go 20% of its workforce as the cloud company undergoes what CEO Drew Houston calls a “transitional period.”
In a letter to staff, Houston said that the reduction in headcount would impact 528 people. The goal, he added, was to make cuts in areas where Dropbox has “over-invested” while designing a “flatter, more efficient” team structure.
“As CEO, I take full responsibility for this decision and the circumstances that led to it, and I’m truly sorry to those impacted by this change,” he wrote. “This market is moving fast and investors are pouring hundreds of millions of dollars into this space. This both validates the opportunity we’ve been pursuing and underscores the need for even more urgency, even more aggressive investment, and decisive action.”
According to a filing with the SEC, Dropbox estimates it’ll lay out total cash expenditures of $63 million to $68 million on the layoffs, primarily in the form of severance and benefits, and recognize $47 million to $52 million of incremental expense. Most of the payouts will occur in Q4 2024, with the remainder to be recognized in H1 2025.
Affected employees will receive severance, equity, and transition payments, as well as certain healthcare and benefits and job placement services.
Dropbox has struggled to grow in recent months, losing market share to rivals including Box and Google Drive. In its most recent fiscal quarter, the company added only 63,000 new users — a fraction of its roughly 18 million user base — while revenue growth slid to the low single digits.
In Q2, Dropbox saw the lowest quarter for growth in its history: 1.9% year-over-year growth to $634.5 million. As of August, the company’s shares had lost more than 20% of their value year to date.
“We continue to see softening demand and macro headwinds in our core business,” Houston write. “While I’m proud of the progress we’ve made in the last couple years, in some parts of the business, we’re still not delivering at the level our customers deserve or performing in line with industry peers.”
The layoffs come a year after Dropbox let go roughly 500 employees — and as the company increasingly invests in AI technologies. Dropbox recently expanded its AI-powered smart organization and search tool, Dropbox Dash, with enterprise-focused features including data governance controls.
In his letter, Houston said that Dropbox plans to share more details on high-level changes and its 2025 strategy in the coming days.
