The coronavirus pandemic has not been kind to Uber. The company is cutting 3,000 jobs and closing 45 offices, according to a story broken by the Wall Street Journal. Less than two weeks ago, Uber announced that it was trimming 3,700 jobs, in an attempt to get back on a track towards profitability. Today’s news means that the company will cut one quarter of its workforce within a month.
This change comes at a time when Uber is attempting to pivot from a ‘growth at all costs’ strategy. So, it was particularly unfortunate timing for the company when mass shelter-in-place orders took effect. Covid-19 has put a big dent in ridesharing, Uber’s most profitable service. Rides typically make up 75% of Uber’s revenue, but in April, that business was down 80% yearly. UberEats did well in the first quarter, gaining 52% in bookings, but it is not enough to pay the bills. ‘I will caution that while Eats growth is accelerating, the business today doesn’t come close to covering our expenses,’ CEO Dara Khosrowshani wrote in a memo. The company was planning to reach profitability by the end of 2020, a goal which has now been pushed back to 2021.
Now, Uber is looking to focus on its core services. Mr. Khosrowshani expressed in the same memo that the company will reevaluate Uber Freight and autonomous vehicles, among other projects. It is not clear what the future will be for the freight program, however we do know that it has not been a profitable part of the business in the past. Uber Freight lost $81 million in the fourth quarter of 2019 and $64 million in the first quarter of 2020. The business segment earned $737 million in 2019. Earlier this month, Uber Freight announced that it had moved thousands of touchless loads without human intervention.
Now, Uber’s investments and research projects are likely to be put on hold. The business is planning to scale back on AI research and Uber Works, which helped employers and gig workers find each other. In his memo, Mr. Khosrowshani noted that he wanted to keep the company intact and ‘wait this damn virus out,’ but was unable to find a way to do so.