Dropbox has announced it will lay off 20% of its workforce, impacting 528 employees as the company grapples with slow growth and external economic pressures. This marks the second major round of layoffs in less than two years, underscoring the challenges facing the cloud storage giant.
Company to Provide Support to Affected Employees
In a blog post shared with the public, CEO Drew Houston expressed regret over the decision and outlined the severance package for impacted workers. Affected employees will receive up to 16 weeks of severance pay, with additional compensation based on tenure. They will also retain their year-end equity vest and have access to dedicated transition support, especially for immigrant workers, who will receive one-on-one consultation and extra transition time.
Economic Downturn and Internal Challenges
According to Dropbox’s SEC filing, the layoffs are expected to cost the company between $47 million and $68 million in severance payments and related expenses. Houston cited both external and internal factors contributing to the difficult decision. “We continue to see softening demand and macro headwinds in our core business,” he wrote, acknowledging that the economic downturn has pressured their customers and, by extension, their business.
However, he also noted that the company’s organizational structure had become overly complex, with too many layers of management slowing down operations. This internal inefficiency was identified as another key reason behind the layoffs.
Slowing Growth Triggers Workforce Cuts
This round of layoffs follows a similar move in 2023, when Dropbox cut 16% of its workforce due to slowing business growth. Dropbox’s most recent fiscal quarter showed limited growth, with only 63,000 new users added, and a mere 1.8% increase in revenue year-over-year—the lowest in the company’s history.
The company’s struggles reflect broader trends in the tech sector, where slowing demand and economic headwinds continue to challenge businesses. Despite being profitable, Dropbox has not been able to maintain its previous growth trajectory.
For further details on the layoffs and company’s future plans, read the full article on Engadget.