This year, Uber intends to tighten its purse strings. Dara Khosrowshahi, CEO of the ride-hailing company, said in an email to employees obtained by CNBC that the company would cut back on spending due to a “seismic shift” in investor sentiment.
The first to go in marketing and incentives, also known as Uber’s various perks for customers and drivers such as sign-up bonuses and ride discounts. Although Khosrowshahi didn’t mention layoffs in the e-mail, he did state that any new hires at the company would be considered a privilege.
“We have to make sure our unit economics work before we go big. The least efficient marketing and incentive spend will be pulled back. 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,” wrote Khosrowshahi.
Last week’s quarterly earnings call from the company contained both good and bad news: Uber’s reported revenue of $6.9 billion for the first quarter of 2022 was a staggering 136 percent increase over the same period last year.
Demand is clearly returning to pre-pandemic levels. However, the company also lost $5.6 billion as a result of its numerous investments, which included overseas ride-sharing apps.
Uber frequently acquires or buys a stake in local competitors. However, as the Chinese ride-hailing company Didi discovered, this strategy can backfire. Last year, Uber sold its stake in Didi after its value dropped by $2 billion in a matter of weeks.
The transportation app company is also looking to speed up the sale of its 29 percent stake in Russia’s ride-hailing platform .
Uber’s incentive program has increased new driver sign-ups and ridership while also causing the company to incur significant losses. Last August, the company reported a $509 million loss due solely to its heavy spending on sign-up bonuses used to entice drivers back on the road.
The ridesharing platform intends to focus even more on Uber Eats and its new Freight program, which allows businesses to ship packages. Uber’s delivery business generated $2.5 billion in revenue in the first quarter of 2022, and the company now has a record number of merchants.
“Investors are happy with Delivery’s growth coming out of the pandemic and see that we have performed better than many other pandemic winners. I must admit that was a bit of a surprise for me because I firmly believe Delivery should be growing even faster,” Khosrowshahi wrote.