Dropbox today joined the fray of tech companies announcing layoffs. The cloud storage giant announced today that it plans…
The cuts amount to roughly 500 employees.
He added that the company’s core cloud business growth was slowing as challenges from the economic downturn put pressure on customers, making some of its profitable investments no longer sustainable.
“Part of this is due to the natural maturation of our existing businesses, but more recently, headwinds from the economic downturn have put pressure on our customers and, in turn, on our business,” he said. “As a result, some investments that used to deliver positive returns are no longer sustainable.”
The company said it had shifted some employees from one team to another to focus on its AI projects but would need more talent with a different mix of skill sets, particularly in AI and early-stage product development.
Shares of Dropbox were up 5% in Thursday’s premarket trading.
More on Dropbox’s cut
According to the SEC filing, the business would face layoff-related expenses of between $37 million and $42 million, which will be reported in Q2. It was noted that results for the first quarter, which will be released on May 4, will meet or beyond expectations.
Ironically, even with the strong results that imply that Dropbox is profitable, Houston said the company is choosing to take a preemptive step to cut jobs and invest in new areas to keep up with the pace of change, given that growth is slowing.
Houston is also on the board of Meta Platforms, which said on Wednesday AI was helping it boost traffic to Facebook and Instagram and earn more in ad sales.
The fears that AI would lead to additional job losses are progressively coming true, and the most recent development will only reinforce those guts for businesses looking to reduce operating expenses.