Dropbox announced a 20% workforce reduction, leading to the layoff of 528 employees amid slowing growth in its core cloud storage business. The last time Dropbox conducted a workforce reduction was in April 2023, when about 500 people were laid off due to slowed growth and a decision to shift focus toward AI development.

“As we’ve shared over the past year, we are in a period of transition as a company,” wrote CEO and co-founder Drew Houston in a blog post, noting that the company is now working to lay the foundation for the next stage of growth with products like Dash for Business. However, continuing this transition while maintaining the current structure and investment levels is no longer viable.

“We are therefore making more substantial cuts in areas where we’ve over-invested or that are inefficient, while also developing a more suitable and effective team structure overall,” Houston stated.

In the second quarter, Dropbox’s paid user base grew by 63,000, a slight increase compared to the total base of 18 million users. According to TechCrunch, this quarter saw Dropbox’s slowest growth in the company’s history, with its stock down over 20% since the beginning of the year by August.

In the near future, as Houston promised, the company will provide more details on its strategy to develop its core business and accelerate new product releases in 2025. He also stated that all laid-off employees would receive legally required severance, most of which will be paid in the fourth quarter of the 2024 fiscal year.