Cloud storage company, Dropbox (NASDAQ:DBX), announced plans to reduce its workforce by roughly 16% as part of restructuring efforts. What do you need to know about Dropbox layoffs lately?

According to the company’s announcement Thursday, Dropbox plans to cut about 500 employees in response to slowing growth.

“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,” said Dropbox Chief Executive Drew Houston in a letter to employees. “As a result, some investments that used to deliver positive returns are no longer sustainable.”

Per FactSet, Dropbox sales eased to 7.7% in 2022, from 12.7% the year prior and 15.2% in 2020.

Dropbox Layoffs Come Amid AI Wave

According to Houston, slowed growth isn’t the only reason for the job cuts — apparently, the company is gearing up for a new artificial intelligence (AI) fueled era of development.

[Dropbox’s] “next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development,” Houston said. “We’ve been bringing in great talent in these areas over the last couple years and we’ll need even more.”

The company has laid out expectations for between $37 million and $42 million in severance, employee benefits, and other charges related to the layoffs. Dropbox has stated most of the charges will hit in the company’s second fiscal quarter, all of which will be paid before year-end.

Despite the bearish report, DBX stock is only down about 2.5% today. DBX stock is down 10% year-to-date (YTD).

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.