Uber Technologies Inc (UBER.N) 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.”
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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 (LYFT.O) 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.”
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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 (GRUB.N) 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.
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