Uber is to cut almost 4,000 jobs after lockdowns around the world hit the ride-hailing app’s business.
Just a day before Uber was due to report its first-quarter earnings, the company said in a brief securities filing that it was cutting 3,700 staff, equivalent to about 17 per cent of its workforce.
Uber said that the job losses would mainly hit its full-time “customer support and recruiting teams” in a move that would cut its operating expenses but probably cost it about $20 million in redundancy payments.
It said at the same time that Dara Khosrowshahi, the chief executive, had agreed after consultation with the board to forgo his $1 million base salary for the remainder of the calendar year. The company made no mention of any bonus arrangements Mr Khosrowshahi, 50, might have.
Uber was founded in San Francisco, California, in 2009. It developed an online taxi-ordering service that revolutionised ride-hailing for individuals and companies. Now listed on the New York Stock Exchange with a market value of just under $50 billion, Uber has attracted controversy in the past for the treatment of its self-employed drivers.
Uber is not alone in cutting jobs in the face of Covid-19, which has decimated the market for taxis and cabs owing to restrictions on movement and the closure of businesses. Lyft, its rival, has revealed plans to lay off 982 employees, about 17 per cent of the workforce, as well as putting other staff on furlough.
Daniel Ives, an analyst at Wedbush Securities, said: “On the ride-sharing front, Uber and Lyft face Herculean-like challenges as the new reality will likely change the business models of these companies and competitors for the foreseeable future.” Health and hygiene concerns could put people off booking cabs and more people could work from home, he said.
A slowdown in rides is also bad news for drivers, who tend to be hired as contractors by ride-hailing companies and are paid based on the number of fares they pick up. Uber has 3.9 million registered drivers.
Analysts at Cowen, an investment bank, said that improved earnings at Uber Eats should mitigate an expected drop in revenues from the rides division when the company reports its quarterly earnings today. Services such as Deliveroo and Just Eat have become popular during lockdown as households seek a break from cooking.
Uber’s shares fell 23 cents, or 0.9 per cent, to close at $27.82 last night. Lyft’s stock rose, however, in trading after the bell after it reported a 23 per cent increase in first-quarter revenue from the previous year to $955.7 million, while its rider numbers rose by 3 per cent to 21.2 million. Its losses were $398.1 million for the period, up from $356 million the previous quarter but better than forecasts. That was enough to lift its shares by 17.4 per cent to $30.67 in late trading on Wall Street.
