Uber is cutting 3,700 jobs, 14% of its total workforce, as the coronavirus ravages ride-hailing revenue.
Uber said on Wednesday that it would cut 3,700 jobs, representing about 14% of its global workforce, as the coronavirus pandemic ravages ride-hailing revenue.
"Due to lower trip volumes in its Rides segment and the Company's current hiring freeze, the Company is reducing its customer support and recruiting teams," the company said in a regulatory filing.
On Tuesday, CEO Dara Khosrowshahi told employees at an all-hands meeting that plans for layoffs would be finalized within two weeks, according to a source familiar with the meeting. Khosrowshahi has agreed to forgo his $1 million base salary until the end of the year, Uber said in the filing.
Uber said the layoffs would cost it about $20 million in severance and other benefits payouts.
Uber had 26,900 global employees as of December 31, with 10,700 in the US and 16,200 in other countries, according to its annual report.
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Shares of Uber fell as much as 2.5% in early trading on Wednesday and remained down about 32% from February highs.
As the coronavirus pandemic precipitated shelter-in-place orders in most of the world, ride-hailing revenue for both Uber and Lyft has plummeted. Uber has leaned heavily on its Uber Eats delivery segment to make up some of the difference, but it's not clear how much the quickly growing business can add.
"Our Eats business has become an important resource right now, especially by restaurants hit by containment policies," Khosrowshahi told analysts in April.
Lyft, which operates only in the US and recently began delivering some "essential" items, said on April 29 that it would lay off 1,000 employees, or about 17% of its workforce.
Uber investors will get their first complete look at the impact of the pandemic when Uber reports its first-quarter financial performance on Thursday. In April, the company withdrew its 2020 guidance, including its prediction of a profit, and said that some of its minority investments could be reduced by as much as $2.2 billion in the first quarter.
Some analysts on Wall Street are worried that revenue may never return to previous levels for affected companies.
"We are assuming in a more draconian scenario that ~30% of the Gig Economy revenue disappears for the next 1-2 years and a portion never returns," Daniel Ives of Wedbush told clients Wednesday.
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