Dropbox has announced its latest workforce reduction, cutting 20% of its global staff, impacting 528 employees. This marks the third round of layoffs in recent years as the company navigates shifts in its strategic direction and product focus.
Previously, in January 2021, Dropbox laid off 11% of its workforce, about 315 employees, citing the need for a “healthy” future and sustained growth. More recently, in April 2023, the company reduced its workforce by 16%, affecting 500 roles, as it pivoted towards artificial intelligence (AI) initiatives. The latest round of layoffs aligns with Dropbox’s shift towards newer growth areas, particularly its Dash for Business product. It is aimed at increasing efficiency while streamlining the company’s structure to improve performance across its operations.
CEO Drew Houston shared the news in a company-wide email, stating that the decision was part of a broader restructuring aimed at increasing operational efficiency and focusing on new growth areas. Houston explained that while Dropbox’s core FSS business has matured, demand has softened, and the company is experiencing macroeconomic challenges.
Internally, Dropbox’s organisational structure has grown complex, with added layers of management affecting speed and performance. As a result, the company will streamline its workforce, with a focus on addressing over-invested or underperforming areas.
According to a filing with the SEC, Dropbox estimates that total cash expenditures related to the layoffs will range from $63 million to $68 million, primarily for severance and benefits to support impacted employees. The company expects to recognise $47 million to $52 million in incremental expenses, with most of the payouts scheduled to occur in the fourth quarter of 2024 and the remainder in the first half of 2025.
The severance package includes 16 weeks of pay along with an additional week for each year of service, along with Q4 equity vesting and prorated 2024 bonuses. Affected U.S.-based employees will receive up to six months of COBRA health coverage, while those in Canada will have a one-month extension. Additional support includes one-on-one immigration consultations for visa holders, company devices for personal use, and access to career coaching and job placement services.
The tech giant will hold Town Hall meetings later this week to address employee questions and provide further details on its future direction.
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