May 26 (Reuters) - Dropbox said on Tuesday that CEO and co-founder Andrew Houston would step down after a transition period and promoted insider Ashraf Alkarmi to co-CEO ahead of his succession as the sole chief executive.
The file hosting service provider's shares fell nearly 2%. They have declined more than 3% this year.
Alkarmi has served as general manager of the company's core products, including file sharing, e-signature tool Sign and document platform DocSend.
The company has been ramping up investment in AI, including Dropbox Dash, which connects apps such as Google Workspace and Slack to help manage files.
Before joining Dropbox in 2024, Alkarmi held product leadership roles at Vimeo, Amazon and Meta Platforms.
"AI is changing what's possible, and our customers are going to see a very different Dropbox – faster, smarter and built around the way they actually work," Alkarmi said.
Houston will transition into the role of executive chairman after being with the company for nearly two decades, the company said.
The move gives Dropbox a chance "to refocus in this fast-evolving cloud storage market," said Brandon Carnovale, a partner at activist investor Half Moon Capital, which holds shares in the company.
In March 2025, Half Moon had pushed for Houston's resignation, and pressured Dropbox to scrap its dual-class structure that gives him extra voting power.
"We see significant potential for Dropbox to unlock value by focusing on product monetization and revamping its pricing model," Carnovale added.
Dropbox also appointed Michael Torres chief product officer, effective July 7. Torres is currently vice president for the Chrome browser at Alphabet's Google, before which he led Amazon's Kindle business. The company had also changed its CFO in December.
Earlier this month, Dropbox reported first-quarter revenue of $629.5 million, beating analysts' average estimate of $620.6 million, according to data compiled by LSEG.
(Reporting by Anhata Rooprai in Bengaluru; Editing by Joyjeet Das)
