Dropbox Announces Layoffs of 20% of Its Workforce Amid Transitional Period

Dropbox has announced a significant reduction in its workforce, with plans to lay off 20% of its staff. This decision, described by CEO Drew Houston as part of a “transitional period,” will impact 528 employees. In a letter to the staff, Houston explained that the layoffs are aimed at making cuts in areas where the company has “over-invested” and at designing a “flatter, more efficient” team structure.

Houston took full responsibility for the decision and expressed his apologies to those affected. The laid-off employees will receive severance packages, equity, transition payments, as well as certain healthcare benefits and job placement services.

The layoffs come at a time when Dropbox is facing challenges in growing its user base and revenue. In its most recent fiscal quarter, the company added only 63,000 new users, a small fraction of its approximately 18 million user base, and saw revenue growth decline to the low single digits. This quarter marked the lowest growth in the company’s history, with a 1.9% year-over-year growth to $634.5 million.

Dropbox has been losing market share to competitors such as Box and Google Drive. As of August, the company’s shares had lost more than 20% of their value year to date. Houston attributed the struggles to “softening demand and macro headwinds” in the core business.

This round of layoffs follows a similar reduction last year when Dropbox let go of roughly 500 employees. The company is also investing in AI technologies, recently expanding its AI-powered smart organization and search tool, Dropbox Dash, with enterprise-focused features.

Houston indicated that Dropbox will share more details on high-level changes and its 2025 strategy in the coming days.