Uber To Cut Quarter Of Workforce In Profitability Drive

Uber is to cut 23 percent of its workforce and focus on its core businesses of ride hailing and food delivery as it looks to become profitable amidst challenges posed by the coronavirus pandemic, the company said.

The San Francisco-based firm is to cut a total of 6,700 jobs, including 3,700 redundancies announced earlier in May, as it reduces investment in “non-core projects” such as a start-up incubator and AI research, said Uber chief executive Dara Khosrowshahi.

The restructuring is to see Uber close or consolidate 45 global offices and is expected to generate $1 billion (£820m) in annual savings, Khosrowshahi said.

The news saw Uber’s share price rise more than 8 percent on Monday.

Slow recovery

“This is a decision I struggled with . . . I wanted there to be a different answer,” Khosrowshahi said in an email to staff whose contents were widely reported.

He noted that the pandemic had seen ride-shares fall by 80 percent worldwide, and said that while there are signs of a recovery there is “limited visibility as to its speed and shape”.

The measures are expected to mean a one-time charge of $210m to $260m in the second quarter, Uber said in a Monday regulatory filing.

The first wave of 3,700 layoffs affected mainly customer-support and recruiting staff, while the latest round touches nearly all departments.  At the end of the first quarter Uber said it employed 28,600 people before the pandemic.

Lyft said in April it would cut about 17 percent of its staff, while Airbnb announced a 25 percent workforce reduction earlier in May.

Uber said it would look for “strategic alternatives” to the Uber Works business, launched only last October, that matches people with temporary jobs, and would shutter its Incubator and AI Labs units.

‘Enormous growth opportunity’

Uber Eats saw 50 percent year-on-year growth  in the first quarter due to lockdowns, and while it still operates at a heavy loss, Khosrowshahi said it was Uber’s next “enormous growth opportunity”.

Uber is in talks to aquire competitor Grubhub amidst regulatory concern at consolidation in the food delivery market.

The firm is to close one of its San Francisco offices as part of the plan and will close its Singapore office in favour of an Asia-Pacific headquarters whose location hasn’t yet been decided upon.

Before the pandemic, Uber had expected to become profitable on an EBITDA basis by the end of this year, but said on 7 May it now expects profitability some time next year, partly due to stronger food delivery orders.