SAN FRANCISCO (KRON) — Cloud storage company Dropbox announced Thursday that it would be laying off 500 employees, or about 16% of its global workforce. A letter to employees from CEO Drew Houston cited slowing growth and the coming wave of AI as the main reasons behind the layoffs.

“The AI era of computing has finally arrived,” Houston wrote. “We’ve believed for many years that AI will give us new superpowers and completely transform knowledge work.”

In an SEC filing, the company said the layoffs are part of a plan to “streamline the Company’s team structure to support long-term growth and profitability objectives.”

“Dropbox intends to strategically reinvest some savings from this reduction in force into future growth initiatives, and will continue to hire for roles critical to those initiatives,” the filing also states.

According to Houston, the layoffs are part of a shift toward a more AI-centered business model for the company.

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

Employees impacted by Thursday’s job cuts will receive severance packages that include:

  • Up to 16 weeks of pay with one additional week of pay for each year they worked there
  • Up to six months of healthcare coverage
  • Company devices for personal use
  • Job placement services and career coaching

“I’m truly sorry that as a result of these decisions, we have had to part ways with Dropboxers and valued teammates who have made many contributions to the company,” Houston concluded in his letter.

The job cuts from Dropbox are the latest in an ongoing run of layoffs across the tech sector. Earlier on Thursday, SF-based ride-share company Lyft also announced that it would be cutting over 1,000 jobs.