Dropbox lays off 20% of its employees

Dropbox is laying off 20% of its workforce as the cloud company goes through what CEO Drew Houston calls a “transition period.”

In one letter to staff, Houston said the reduction in headcount would affect 528 people. The goal, he added, was to make cuts in areas where Dropbox has “overinvested” 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 am truly sorry for those affected 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 one archiving with the SEC, Dropbox estimates it will post total cash expenses of $63 million to $68 million on layoffs, primarily in the form of severance and benefits, and recognize $47 million to $52 million in incremental expenses. Most of the payments will take place in the 4th quarter of 2024, while the rest will be recognized in the 1st half of 2025.

Affected employees will receive severance, equity and transition payments, as well as certain health and job placement benefits.

Dropbox has struggled to grow in recent months, losing market share to competitors including Box and Google Drive. In its most recent fiscal quarter, the company added just 63,000 new users — a fraction of its roughly 18 million user base — while revenue growth fell into the low single digits.

In Q2, Dropbox experienced the lowest quarter of 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 slowing demand and macro headwinds in our core business,” Houston wrote. “While I’m proud of the progress we’ve made in the last few 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 of about 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 business-focused features including data management controls.

In his letter, Houston said Dropbox plans to share more details about high-level changes and its 2025 strategy in the coming days.