According to a statement written to Uber staff and originally published by CNBC, CEO Dara Khosrowshahi promised to cut costs despite a “seismic change” in the financial sector.
Efforts to cut costs are in response to the labor market’s turbulence, which is forcing Uber to recruit drivers to fulfil rising demand. Khosrowshahi stated that Uber will treat recruiting companies as a “luxury” in the future, implying that the company may attempt to freeze or even reduce its headcount in order to become leaner.
What’s New?
As the job market tightens and tech stocks in particular fall substantially from their highs at the start of the COVID-1, Uber is the latest company to announce a hiring freeze.
Pandemic number nine. Facebook’s parent company, Meta, recently said that it would slow the hiring of mid-level roles.
Uber is the latest corporation to announce a hiring freeze in the face of a tight labor market.
Khosrowshahi stated that Uber will now focus on generating profitability based on free cash flow rather than adjusted earnings before interest, taxes, depreciation, and amortization, as this is what investors now demand.
What’s More?
Uber has been chastised for how it calculates its adjusted profitability for a long time. The company’s definition of EBITDA is commonly regarded as an unreliable assessment of the company’s total profitability since it includes an exceptionally long list of exclusions. Since the beginning of the year, the company’s stock has dropped by more than 40%.
Khosrowshahi wrote, “Meeting the moment involves making compromises.” “For our investments, the hurdle rate has risen. As a result, some programs that require large funding will be delayed. Before we grow big, we need to make sure our one-size-fits-all economy works.”
Digging In More Details
“The least efficient marketing and incentive spend is withdrawn,” he continues. We examine when and where we hire people and approach hiring as a privilege. We’ll be even more cost-conscious across the board.”
Uber verified the validity of the document but declined to comment on its contents.
Uber announced a $5.9 billion loss in its first quarter results last week, owing to investments in other mobility startups such as Grab, Aurora, and Didi. For the full year of 2022, the company forecasts “substantial positive cash flows,” which would be a first.