Dropbox Inc. is laying off about 11% of its workforce, or 315 employees, in a move that Chief Executive Drew Houston described as “painful, but necessary.”

Houston (pictured) notified employees about the cuts in an internal memo that was published today as part of a regulatory filing. In the same filing, Dropbox told shareholders that Chief Operating Officer Olivia Nottebohm is stepping down. 

Houston wrote in the memo that “our recent decisions regarding our new leadership structure and remote work policy have set us on the right path, and now we need to make sure our teams and investments also line up.” The CEO pointed to the company’s switch to remote working as one factor behind the workforce reduction. “We require fewer resources to support our in-office environment, so we’re scaling back that investment and redeploying those resources to drive our ambitious product roadmap,” he said.

Dropbox, which provides a cloud-based file storage platform popular in the enterprise, has been expanding its feature set to win more business from big organizations. The company in November introduced a paid add-on that enables companies to set limits on how long files are retained to comply with data regulations. Dropbox also rolled out two other add-ons earlier in 2020 that make it easier for designers to work with visual assets and simplify the process of migrating business records to its platform. 

The company’s investments in engineering have put it in a strong position to support customers’ shift to remote work. Dropbox recorded its very first quarterly profit last year and, in its most recent earnings report, exceeded analyst expectations by announcing that revenues had increased 14%, to $487.4 million, during the three months ended Sept. 30. Dropbox maintained its newly achieved profitability in that quarter with earnings of 18 cents per share.

“Over the past year, we’ve talked a lot about the importance of running a tight ship and getting the company ready for the next stage of growth,” Houston told employees in the memo today. “This will require relentless focus on initiatives that align tightly with our strategic priorities, and having the discipline to pull back from those that don’t.”

He added, “This is one of the toughest decisions I’ve had to make in my 14 years as CEO.”

Dropbox in November provided revenue guidance of $497 million to $499 million for the fourth quarter. The company said at the time that it’s aiming to achieve margins of 28% to 30% in the long term. 

Photo: Dropbox