Dropbox cuts its workforce by 20 percent in latest round of layoffs

Dropbox is cutting its workforce by 20 percent today - laying off 528 people - amid slowing growth for its core cloud storage business. The latest round of cuts comes after Dropbox laid off around 500 people in early 2023 to redirect efforts to its AI division.

"We're making more significant cuts in areas where we're over-invested or underperforming while designing a flatter, more efficient team structure overall," writes Dropbox CEO Drew Houston in a blog post titled An update from Drew. At the same time, Houston mentions that the market is moving towards where the company placed its "biggest bets," which includes Dropbox's Dash AI search product.

For its second-quarter earnings this year in August, Dropbox reported an increase of 63,000 paid users quarter over quarter, which is light compared to its total 18 million-plus user base. As reported by TechCrunch, Q2 was Dropbox's slowest growth in company history, and its shares lost more than 20 percent of their value year to date in August.

Houston says Dropbox will say more about its 2025 strategy to grow its core business and speed up new products in the coming days. Affected employees will get sixteen weeks of severance pay, equity, bonus plan lump sums, payouts of approved leave, and immigration consultation for those on work visas. Dropbox says most of the payouts will take place in fiscal Q4 2024.