Dropbox has laid off 500 employees, approximately 16% of its workforce, according to a blog post on the company’s website Thursday from CEO Drew Houston. File Photo by Mauritz Antin/EPA-EFE

“First and foremost, I want to recognize the impact this decision has on Dropboxers who are affected and their families, and I take full ownership of this decision and the path that led us here,” Houston wrote.

While Dropbox remains profitable, company leadership sees emerging challenges to its business model.

“While our business is profitable, our growth has been slowing,” Houston said. “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. As a result, some investments that used to deliver positive returns are no longer sustainable.”

The company also said advances in AI will affect the company’s future.

“We’ve believed for many years that AI will give us new superpowers and completely transform knowledge work. And we’ve been building towards this future for a long time, as this year’s product pipeline will demonstrate,” said Houston.

A Securities and Exchange Commission filing reveals that the company expects to spend between $37 and $42 million.