Dropbox will lay off 1 in 5 employees

Dropbox announced a 20% workforce cut, resulting in 528 layoffs, as growth in its core cloud storage business slows. The last time Dropbox downsized was in April 2023. At that time, about 500 people were laid off due to a slowdown in growth and the decision to redirect efforts to the development of AI.

Image source: Dropbox

«As we have communicated over the past year, we are in a period of transition as a company,” CEO and co-founder Drew Houston wrote in a blog post, noting that the company is now working to set the stage for its next phase of growth with products such as as Dash for Business, and that making this transition while maintaining the current structure and investment levels is no longer possible.

«Therefore, we are making more significant cuts in areas where we have overinvested or are underperforming, while developing a more appropriate and more effective team structure overall,” Houston said.

Dropbox’s paid user base grew by 63,000 in the second quarter, which is small compared to its overall user base of 18 million. As TechCrunch reports, Dropbox’s second quarter saw the slowest growth in the company’s history, with its shares down more than 20% year-to-date through August.

In the near future, Houston promises, the company will share more details about its strategy to develop its core business and accelerate new product launches in 2025. He also said that all those laid off will receive the payments required by law, most of which will be made in the fourth quarter of the 2024 fiscal year.