Dropbox lays off 20% of workforce amid slowing business growth
What's the story
Dropbox, the popular cloud storage company, has announced a 20% cut in its workforce. The move means as many as 528 employees have been laid off and comes as a response to the slowing growth of its core cloud storage business. The layoffs mirror a similar move from early 2023 when nearly 500 employees were shown the door to reallocate resources to the firm's AI division.
Strategic shift
CEO outlines restructuring strategy and future focus
Dropbox's CEO Drew Houston, in a blog post titled An update from Drew, detailed the company's strategy behind these layoffs. He said the company is making significant cuts in areas where it is either over-invested or underperforming. The goal is to establish a leaner and more efficient team structure. Despite the current challenges, Houston remains optimistic about Dropbox's future prospects, especially its Dash AI search product.
Growth challenges
Dropbox's growth slows despite increase in paid users
In its Q2 earnings report for this year, Dropbox revealed a meager 63,000 paid users added from the previous quarter. But, the growth was hardly noticeable given its total user base of over 18 million. According to TechCrunch, Q2 was the slowest growth in Dropbox's history and resulted in more than 20% drop in its share value year-to-date by August.
Severance details
Dropbox promises comprehensive severance package for laid-off employees
Dropbox has promised a full severance package for the impacted employees. The package consists of 16 weeks of severance pay, equity, bonus plan lump sums, payouts of approved leave, and immigration consultation for employees on work visas. The company expects most of these payouts to take place in fiscal Q4 2024.