Uber to focus on core rides and delivery business, cuts 23% of workforce

The Uber Technologies Inc. application is displayed in the App Store on an Apple Inc. iPhone in an arranged photograph taken in Arlington, Virginia, U.S. on Monday, April 29, 2019. Photographer: Andrew Harrer/Bloomberg

Uber Technologies Inc will concentrate on its core businesses in ride-hailing and food delivery and cut 23% of its workforce in an attempt to become profitable despite the coronavirus pandemic, Chief Executive Officer Dara Khosrowshahi said in an email to employees on Monday.

Uber will cut a total of 6,700 jobs, including the 3,700 it had announced earlier this month, Khosrowshahi said, adding that the company plans to reduce investments in several “non-core projects.”

Shares in Uber were up 6.9% to $34.69 following the announcement.

In a regulatory filing on Monday, Uber said the layoffs and restructuring measures will result in one-time, mostly cash-based charges of between $210 million and $260 million in the second quarter. Overall, the measures are expected to generate $1 billion in annual cost savings compared with pre-pandemic budget plans.

Uber employed 28,600 people before the pandemic crippled its business, according to a regulatory filing at the end of the first quarter. The company’s initial wave of 3,700 layoffs affected less-costly customer support and recruiting teams, while Monday’s announcement affects 3,000 employees across nearly all departments.

Smaller U.S. rival Lyft Inc said late last month it would cut about 17% of its workforce.

Khosrowshahi said Uber must establish itself as a self-sustaining enterprise no longer in need of outside capital, calling the company’s food delivery business Uber Eats the “next enormous growth opportunity.”

Before the pandemic struck, Uber said it would become profitable on the basis of adjusted earnings before interest, taxes, depreciation and amortization by the end of this year. The company withdrew that guidance as global stay-at-home orders to curb the virus pummeled its ride-hailing business.

Ride-hailing trips, which generate the bulk of Uber‘s revenue, dropped 80% globally in April, but the company said demand was slowly recovering.

Uber on May 7 said it was now aiming to become profitable on an adjusted basis at some point in 2021, partially thanks to an uptick in restaurant food order deliveries.

Khosrowshahi on Monday called Uber Eats a silver lining during the crisis and said be believes the currently loss-making unit would one day be profitable.

Demand for Uber Eats jumped 50% in the first quarter, but the unit still lost $313 million on an adjusted EBITDA basis.

Uber is currently in talks to buy food delivery rival GrubHub Inc to expand its market share.

Uber has been working on various other businesses, including the development of self-driving cars and a freight logistics network. Khosrowshahi did not directly mention these businesses in his email and a spokesman declined to comment beyond the email.

His email said Uber would close its startup incubator program and artificial intelligence research lab. Uber was also looking at strategic alternatives for Uber Works, a platform Uber launched in October to help companies fill staffing gaps with temporary workers during peak demand.

Khosrowshahi also said the company was closing or consolidating some 45 office locations globally as part of the restructuring.

Reuters

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.