For the second time in less than two years, Dropbox is laying off a large portion of its workforce. In a blog post written by CEO Drew Houston, the company said it will cut its global workforce by 20 percent, or 528 employees.
Dropbox will provide up to 16 weeks of pay to affected employees, with permanent employees eligible to receive an additional week of pay for each full year worked at the company. All affected employees will also receive equity vests at the end of the year, and the company will provide dedicated support to immigrant employees with individual counseling and additional transition time.
According to a filing with the SEC, Dropbox expects it will lose up to $68 million in cash expenditures in this latest round of layoffs. Also, the company expects to recognize between $47 million and $52 million in incremental expenses related to all severance and benefit payments before the end of the year and through the first half of 2025.
“As CEO, I take full responsibility for this decision and the circumstances that led to it, and I am truly sorry to those impacted by this change,” Houston wrote. “We continue to see declining demand and macro headwinds in our core business. But external factors are only part of the story. We have heard from many of you that our organizational structure has become overly complex, with additional layers of management slowing us down.”
In the middle of last year, Dropbox laid off 500 employees, or about 16 percent of its staff at the time. Comparing the memo Houston shared then to the one he posted today, there is a similar theme: slowing growth.
“First, while our business is profitable, our growth is slowing. Part of this is due to the natural maturation of our existing businesses, but more recently, headwinds resulting from the economic downturn have put pressure on our customers and, in turn, our business,” Houston wrote in 2023.
“As a result, some investments that used to produce positive returns are no longer sustainable.” Unfortunately for Dropbox, things haven’t gotten better on that front. As TechCrunch notes, the company only added 63,000 users during its most recent fiscal quarter (PDF link). Year-over-year revenue growth also stagnated at 1.8 percent, the lowest in the company’s history.