Dropbox is laying off 20% of its workforce as the cloud company undergoes what CEO Drew Houston calls a “transitional period” TechCrunch reported.
In a letter to staff, Houston said that the reduction in headcount would impact 528 people. The goal, he added, was to to make cuts in areas where Dropbox has “over-invested” 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’m truly sorry to those impacted 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 a filing with the SEC, Dropbox estimates it’ll lay out total cash expenditures of $63 million to $68 million on the layoffs, primarily in the form of severance and benefits, and recognize $47 million to $52 million of incremental expense. Most of the payouts will occur in Q4 2024, with the remainder to be recognized in H1 2025.
San Francisco Chronicle reported Dropbox is cutting its workforce by 20%, a move prompted by a slowdown in growth within the cloud storage sector, the company announced Wednesday.
In a blog post, CEO Drew Houston explained that the company is making significant cuts in areas where its “over-invested or underperforming,” while also aiming to create a more efficient organizational structure.
“As we’ve shared over the last year, we’re in a transitional period as a company,” he wrote. “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 layers of management slowing us down.”
Houston said the company is in the process of shifting resources and refocusing on new products, including its “Dash for Business” artificial intelligence search engine.
Engadget reported for the second time in less than two years, Dropbox is laying off a substantial portion of its workforce.
Dropbox will provide impacted workers with up to 16 weeks of pay, with tenured employees eligible for one additional week of pay for each complete year that worked at the company. All impacted employees will also receive their year end equity vest, and the company will provide dedicated support to immigrant workers with one-on-one consultation and extra transition time.
Per a filing with the SEC, Dropbox anticipates this latest round of layoffs will cost up to $68 million in cash expenditures. At the same time, the company expects it will recognize between $47 million and $52 million in incremental expenses related to all the severance and benefit payouts it now needs to make before the end of the year and into the first half of 2025.
In my opinion, it is never a good idea to suddenly drop a large number of the company’s workforce. The only good part of this is that the workers who are removed appear to be receiving payouts from Dropbox.