After piling up big losses, Uber is looking to trim costs, raising fears among employees that more layoffs are coming as part of the retrenchment.
An Uber spokesman told Bloomberg that the San Francisco-based company has paused hiring new software engineers and product managers. The teams exceeded their hiring goals for the year, he said.
However, the freeze will not include workers in Uber’s freight or autonomous vehicles businesses, he said.
“We are continuing to aggressively hire talent, including many engineers, all over the world,” the spokesman said. “We temporarily hit pause on some teams while we ensure we’re being both effective and efficient in staffing against our strategic priorities.”
The decision, earlier reported by Yahoo Finance, comes after a painful second quarter for Uber. The company missed revenue expectations and posted a $5.24 billion net loss, its biggest ever. The stock is down 11 per cent from its May initial public offering price.
Last week, Uber said it was cutting 400 marketing employees around the world.
The announcement comes follows Uber reporting of a record second-quarter operating losses of $5.4 billion. The loss includes more than $4 billion in one-time charges for Uber’s initial public offering. However, even without the IPO-related charges, Uber lost $1.2 billion in operating losses.
Before you worry it should be noted that Uber is still okay despite these losses. Uber reported having $13.7 billion in the bank at the end of the second quarter which means it can continue at its current burn rate for more than two years, Bloomberg estimated.
Profitability for the ride-hailing giant is “a few years away,” said Uber’s Chief Technology Officer Thuan Pham during a tech conference in Hong Kong in June. “We have local competitors everywhere trying to aggressively expand to grow their business, and we have to compete vigorously.”
In the U.S. alone, Lyft and Waymo are the biggest names looking to wrestle rides away from the company. Internationally, rivals like India’s Ola and China’s Didi Chuxing are competing for rides in hundreds of cities, often forcing a race to the bottom price-wise that crimps profits.
The pricing issue is less prevalent in the U.S., so Pham is more optimistic about U.S. profits, but the company overall lost more than $1 billion in 2018, and he’s not optimistic it’s going to change soon. He believes that due to the competition, pricing will become tighter and Uber will become more like retail giant Amazon, CNN.com reported.
“Our model is more like Amazon, where we have lots of transactions and maybe make a few pennies per transaction,” Pham said. It may not all bad if that’s the case as Amazon reported a profit of $3.6 billion during the first three months of this year.