Cloud storage giant Dropbox today joined the fray of tech companies announcing layoffs. The company announced today that it will be laying off 16% of its staff, or approximately 500 employees, due to slowing growth and – in the words of CEO Drew Houston – because “the age of AI computing has finally arrived”.
These appear to be the first layoffs the company has made since January 2021, when it laid off 315 employees plagued by the Covid-19 pandemic.
The latest reform was announced to staff in a memo from CEO and co-founder Drew Houstonas well as in a Filing with the SEC.
The SEC filing noted that the company will incur charges of approximately $37 million to $42 million in connection with layoffs, which will be recorded in the second quarter. The first-quarter results, which will be released next Thursday, May 4, will meet or even exceed expectations, he added.
Ironically, even with the good results and the fact that Dropbox is profitable, Houston said the company is choosing to take preemptive action to cut jobs and invest in new areas to keep pace with change, given that growth slows down.
“Although our business is profitable, our growth is slowing down. This is partly due to the natural maturation of our existing businesses, but more recently the headwinds of the economic downturn have put pressure on our customers and, therefore, our business. As a result, some investments that offered positive returns are no longer sustainable,” he wrote.
Interestingly, he also cites AI as a major factor.
“Second, and more importantly, the era of AI in computing has finally arrived,” he continued. “We have believed for many years that AI will give us new superpowers and completely transform knowledge work. And we’ve been building that future for a long time, as this year’s product pipeline will demonstrate. »
For those who have warned that AI will inevitably result in the loss of more jobs, this will be an alarming development. The most cynical would say it’s an easy and timely excuse to cut costs right now, to keep the market and investors optimistic that Dropbox is moving with the times and won’t be disrupted by the next wave of innovation. .
Houston said affected personnel will be notified today and will have the work completed by tomorrow. The company had 3,125 employees before today’s move.
More than 184,000 people were laid off in the tech sector in 2023 at nearly 620 tech companies, according to the Layoff Tracker.fyi.
More soon.
