Cloud storage giant Dropbox is laying off 528 employees, amounting to 20% of its global workforce, as part of a major restructuring effort. CEO Drew Houston announced the decision in a letter to staff, citing the need for a "flatter, more efficient" organizational structure.
The layoffs come as Dropbox faces challenges in its core file sync and sharing business, with Houston acknowledging "softening demand and macro headwinds." The company has struggled to maintain growth in recent quarters, adding only 63,000 new users in its most recent fiscal period.
Houston explained that the cuts target areas where Dropbox has "over-invested" or is "underperforming." The move aims to streamline operations and reduce complexity within the organization, which Houston described as having "excess layers of management slowing us down."
This round of layoffs follows a previous reduction of 500 employees in April 2023. Despite these challenges, Dropbox is pushing forward with investments in AI technologies, including its recently expanded Dropbox Dash tool for enterprise customers.
Affected employees will receive severance packages including 16 weeks of pay plus an additional week for each year of service, as well as their Q4 equity vesting and other benefits. Dropbox estimates the total cost of the layoffs to be between $63 million and $68 million.
As the company navigates this transitional period, Houston emphasized the need for "even more urgency" and "aggressive investment" to compete in a rapidly evolving market. Dropbox plans to share more details about its high-level changes and 2025 strategy in the coming days.
The restructuring at Dropbox aligns with similar moves by other tech companies to flatten management structures and increase operational efficiency in response to changing market conditions.