"The least efficient marketing and incentive spend will be pulled back," Khosrowshahi said in an email to staff on Sunday. "We will treat hiring as a privilege and be deliberate about when and where we add headcount. We will be even more hardcore about costs across the board."
|UBER||UBER TECHNOLOGIES INC.||22.08||-0.78||-3.41%|
The company will also shift its focus on achieving profitability through free cash flow rather than adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).
"We have made a ton of progress in terms of profitability… but the goalposts have changed," Khosrowshahi said.
Khosrowshahi's email to staff, which was first reported by CNBC, comes after Uber reported a net loss of $5.9 billion during the first quarter of 2022 on revenue of $6.9 billion. Uber confirmed the email to FOX Business, but did not comment further.
"After earnings, I spent several days meeting investors in New York and Boston," Khosrowshahi said in the email. "It’s clear that the market is experiencing a seismic shift and we need to react accordingly."
While Uber is serving multitrillion-dollar markets, Khosrowshahi emphasized that "market size is irrelevant if it doesn’t translate into profit."
Khosrowshahi noted investors are "happy" with the growth of the ride-hailing giant's delivery segment, but said that it "should be growing even faster." He added that the freight segment needs to "get even bigger so that investors recognize its value."
Uber's cuts on spending come as competitor Lyft says it will invest more in its drivers and marketing as it anticipates a comeback in demand.
"In terms of our cost categories below cost of revenue, we're projecting that R&D, sales and marketing and G&A increase about one percentage point as a percent of revenue this quarter versus last quarter, Q2 versus Q1," Lyft Chief Financial Officer Elaine Paul told analysts on the company's first quarter earnings call.
Lyft reported a net loss of $196.9 million on revenue of $875.6 million. The company's active riders were 17.8 million, down from 18.7 million in the previous quarter and up from 13.5 million a year earlier.