By Adriano Marchese

Dropbox said it plans to slash one-fifth of its global workforce, or 528 employees, as it looks to make the business more efficient.

In a letter to the company Wednesday, the software company Chief Executive Drew Houston cited a challenging consumer environment weighing on its core business, but also an inefficient business operation.

"We continue to see softening demand and macro headwinds in our core business. 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," Houston said.

According to filings to the Securities and Exchange Commission, the layoffs are expected to carry a cash cost of between $63 million and $68 million, mostly in the form of severance payments, employee benefits and other related costs.

The company expects to recognize about $47 million to $52 million of incremental expense related to the those costs.

Dropbox expects the majority of these expenses to fall in its fourth quarter, with the remainder recognized and paid in the first half of next year.

"We're making more significant cuts in areas where we're over-invested or underperforming while designing a flatter, more efficient team structure overall," Houston added.

Write to Adriano Marchese at adriano.marchese@wsj.com

(END) Dow Jones Newswires

October 30, 2024 09:37 ET (13:37 GMT)

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