Dropbox is cutting 20% of its workforce, marking the second round of significant layoffs in less than two years. In a blog post published by CEO Drew Houston, the cloud storage giant revealed that it will lay off 528 employees across its global operations.

Impact on Employees and Severance Packages

The company is offering impacted employees up to 16 weeks of severance pay, with additional benefits for long-tenured staff, including one extra week of pay for every complete year worked. Dropbox will also honor year-end equity vesting for affected workers and provide specialized support for immigrant employees, including one-on-one consultations and extended transition time.

Financial Costs and Layoff Details

Dropbox estimates that the layoffs will cost the company up to $68 million in cash expenditures. Additionally, the company expects to incur between $47 million and $52 million in severance and benefits payouts through the end of the year and into 2025. Despite these financial costs, the layoffs are seen as a necessary step as Dropbox confronts slow growth and economic challenges.

CEO Takes Responsibility for Difficult Decision

In his blog post, Houston took full responsibility for the decision, acknowledging that the company’s growth has stalled and that external market pressures have further impacted demand for Dropbox’s services. He also pointed to internal challenges, noting that the company’s organizational structure had become overly complex, which hindered efficiency.

A Pattern of Declining Growth

This latest round of layoffs follows a similar move in 2023, when Dropbox cut 500 jobs, or around 16% of its workforce. Houston’s messages from both years highlight the common theme of slowing growth. The company only added 63,000 new users in its most recent fiscal quarter, and its year-over-year revenue growth has stalled at just 1.8%, the lowest in its history.

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