Uber said Wednesday it will lay off 3,700 employees and that CEO Dara Khosrowshahi will forgo his base salary for the rest of the year.
The layoffs to its customer support and recruiting teams represent about 14% of its 26,900 employees, based on Uber’s most recent headcount.
Khosrowshahi made $1 million in base salary in 2019 but gained the vast majority of his compensation from bonuses and stock awards.
The moves were announced in a filing with the Securities and Exchange Commission.
Uber’s stock was down more than 2% Wednesday.
Uber has been hit hard by the coronavirus pandemic, which has crushed the travel industry because of lockdowns to stop the spread of the virus. Uber’s global gross bookings are down 80%, according to a report from The Information last month. Investors will get a greater sense of the impact on Thursday when Uber reports earnings.
Khosrowshahi hinted in a memo to employees Wednesday that more cost cuts are on the way.
“We are looking at many scenarios and at each and every cost, both variable and fixed, across the company,” Khosrowshahi said. “We want to be smart, to move fast, to retain as many of our great people as we can, and treat everyone with dignity, support and respect.”
Khosrowshahi said Uber would give employees “a further, final update” within two weeks.
Uber’s drivers have suffered from lost income, reigniting the debate around whether Uber should be able to classify them as contractors. Khosrowshahi advocated to President Donald Trump for a “third way” of classifying workers beyond contractors and employees, while pushing for gig workers to be eligible for stimulus relief. On Tuesday, California Attorney General Xavier Becerra and three city attorneys in the state announced a lawsuit against Uber and Lyft, alleging they denied workers benefits by misclassifying them.
Even as the company has considered cuts, it reportedly also has been looking at investments for the future. Uber had been in talks to lead a $170 million investment in the electric scooter company Lime, according to The Information, valuing it at $510 million, a 79% drop from its previous valuation. Uber already owns a minority stake in Lime and has its own line of electric scooters and bikes called Jump. The proposed deal would transfer Jump to Lime and give Uber the option to buy Lime at a specified price between 2022 and 2024, according to the report.
Here’s the full memo Khosrowshahi sent to employees:
I wanted to let you know that we just announced the elimination of around 3,700 roles in CommOps and Recruiting, and the closure of 40% of our Greenlight locations. You can read the emails that were sent to those teams here.
With the reality of our Rides trips volumes being down significantly, our need for CommOps as well as in-person support is down substantially. And with our hiring freeze, there simply isn’t enough work for recruiters.
This is not in any way a reflection of these employees’ efforts or contributions to getting us to where we are, as a service that everyone associates with movement and earnings opportunities. We wouldn’t be here without their efforts and I want to personally thank them for everything they’ve done for Uber.
We have worked hard to put together generous severance packages with a longer period of healthcare coverage to help provide a bridge, and we are also supporting EXTs whose roles are affected by today’s decision.
That’s today’s news. But, as I said at yesterday’s All Hands, this is one part of a broader exercise to make the difficult adjustments to our cost structure (team size and office footprint) so that it matches the reality of our business (our bookings, revenue and margins). We are looking at many scenarios and at each and every cost, both variable and fixed, across the company. We want to be smart, to move fast, to retain as many of our great people as we can, and treat everyone with dignity, support and respect. As I said yesterday, you can expect we will have a further, final update for you within the next two weeks.
Days like this are brutal. I am truly sorry that we are doing this, just as I know that we have to do this. And while it’s easier said than done, we have to keep our heads down and keep executing, because that—and nothing less—is what will keep Uber going and get us to the other side.
Given this news, and since we have Q1’20 earnings tomorrow, I thought it would be good to get everyone together again on Friday for a Global All Hands, where we can walk through our financial results and today’s changes, and can continue to answer your questions as openly as possible. Keep an eye out for an invite soon.
-CNBC’s Deirdre Bosa contributed to this report.