For the second time in less than two years, Dropbox is implementing significant layoffs. In a blog post authored by CEO Drew Houston, the company announced it would reduce its global workforce by 20 percent, affecting 528 employees. Dropbox has committed to providing the impacted employees with up to 16 weeks of pay, with tenured employees eligible for an additional week of pay for each full year they have worked at the company.
Additionally, all affected employees will receive their year-end equity vest. The company will also offer dedicated support to immigrant workers, including one-on-one consultations and extended transition periods.
According to a filing with the SEC, Dropbox expects this latest round of layoffs to incur up to $68 million in cash expenditures. Concurrently, the company anticipates recognizing between $47 million and $52 million in incremental expenses related to severance and benefit payouts, which will be accounted for before the end of the year and into the first half of 2025.
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. We continue to see softening demand and macro headwinds in our core business. But external factors are only part of the story. We’ve heard from many of you that our organizational structure has become overly complex, with excess layers of management slowing us down.
Drew Houston
Midway through last year, Dropbox laid off 500 employees, approximately 16 percent of its workforce at that time. Comparing the memo Houston shared then with the one he posted today, a recurring theme is evident: slowing growth.
Houston wrote in 2023;
First, while our business is profitable, our growth has been slowing. Part of this is due to the natural maturation of our existing businesses, but more recently, headwinds from the economic downturn have put pressure on our customers and, in turn, on our business. As a result, some investments that used to deliver positive returns are no longer sustainable.
Unfortunately for Dropbox, the situation has not improved. As TechCrunch notes, the company only added 63,000 users during its most recent fiscal quarter. Year-over-year revenue growth also stalled at 1.8 percent, marking the lowest in the company’s history.
