Investing.com — Dropbox shares rose over 4% Wednesday after the company announced it will reduce its global workforce by approximately 20% as part of efforts to streamline operations and better align with long-term growth and profitability goals.
Dropbox (NASDAQ:) expects the 528 layoffs to result in total cash expenditures of between $63 million and $68 million, with most of the costs related to severance payments, employee benefits, and related expenses.
The company added that it anticipates recognizing between $47 million and $52 million in incremental expenses related to the restructuring. The costs will be largely recognized in the fourth quarter of 2024, with the remaining impact reflected in the first half of 2025.
The workforce reduction marks another strategic move as Dropbox seeks to enhance operational efficiency. In a letter to employees, CEO Drew Houston acknowledged the difficult decision, emphasizing the need for structural changes to better align with the company’s evolving objectives.
“We continue to see softening demand and macro headwinds in our core business,” said Houston. “But external factors are only part of the story. We’ve heard from many of you that our organizational structure has become overly complex, with excess layers of management slowing us down.”
He added that “in some parts of the business, we’re still not delivering at the level our customers deserve or performing in line with industry peers.” As a result, the company is making more significant cuts in areas where it feels it is over-invested or underperforming “while designing a flatter, more efficient team structure overall.”
In addition to the restructuring announcement, Dropbox provided an update on its third-quarter 2024 financial results. The company said it expects results to meet or exceed its previous guidance for revenue, constant currency revenue, and non-GAAP operating margin.
The company will report its Q3 results on November 7, 2024.