Uber is laying off 3,000 employees in the latest round of COVID-19-inspired cost-cutting, CEO Dara Khosrowshahi said in an email to staff. The news, which was first reported over the weekend by The Wall Street Journal, comes as the ride-hailing company has seen an 80 percent drop in its ride-hailing business as a result of the coronavirus pandemic.
“We have to take these hard actions to stand strong on our own two feet, to secure our future, and to continue on our mission,” Khosrowshahi said in the email.
The move comes less than two weeks after Uber laid off 3,700 employees, or 14 percent of its global workforce. In total, the company has eliminated around a quarter of its staff in less than a month.
In addition to laying off thousands of employees, Uber will also close 45 offices globally. And it will reshuffle some of its divisions, Khosrowshahi said, to “re-focus our efforts on our core,” which he defines as “helping people move, and delivering things.”
As such, Uber is winding down its tech incubator and AI labs, which it launched last September. The company will also “pursue strategic alternatives for Uber Works,” its work shift-finder app. And Zhenya Lindgardt, the company’s vice president of customer engagement and business strategy, will be leaving the company, Khosrowshahi said.
Uber Eats, the company’s food delivery serviced, has soared while much of the world is sheltering in place. Last week, the company reported that bookings in its Uber Eats division were up more than 54 percent year over year. But Khosrowshahi notes those gains won’t cover the severe losses brought by the drop in ride-hailing, Uber’s core business.
“I will caution that while Eats growth is accelerating, the business today doesn’t come close to covering our expenses,” Khosrowshahi said. “I have every belief that the moves we are making will get Eats to profitability, just as we did with Rides, but it’s not going to happen overnight.”
Uber isn’t abandoning all of its cost-intensive side businesses. The company’s Advanced Technologies Group, which oversees its self-driving car program, will remain operational — although some ATG employees are being laid off. Last week, Khosrowshahi said Uber’s pursuit of self-driving cars “has always been a long-term investment.”
The pain of COVID-19 is being felt across the ride-hailing industry. Lyft, Uber’s main rival, recently announced that it would be laying off nearly 1,000 employees, or about 17 percent of its workforce. Careem, Uber’s Middle Eastern subsidiary, slashed headcount by more than 30 percent and suspended its bus transport app.
In the March call, Khosrowshahi said the company modeled “an extreme edge case” in which trip volume plummeted 80 percent. Even in that dire circumstance — which has since come to pass — Uber would still end the year with $4 billion in unrestricted cash, plus $2 billion in revolving credit.
But in his email to employees, Khosrowshahi said he hoped the worst was behind them.
“Having learned my own personal lesson about the unpredictability of the world from the punch-in-the-gut called COVID-19, I will not make any claims with absolute certainty regarding our future,” he wrote. “I will tell you, however, that we are making really, really hard choices now, so that we can say our goodbyes, have as much clarity as we can, move forward, and start to build again with confidence.”
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