In an email obtained by CNBC, the CEO of the company said that he would cut back on spending and focus on becoming a leaner business to address investor sentiment.
The email was sent out late Sunday and said that after earnings, I spent several days meeting investors in New York and Boston.
Tech stocks have plummeted from the highs of the coronaviruses, as investors fret over the prospect of an end to the era of cheap money that defined a historic bull market. It was the longest weekly losing streak since 2012 for the index.
In order to address the shift in economic sentiment, the company will slash spending on marketing and incentives.
The most efficient marketing and incentive spend will be pulled back.
We will be deliberate about when and where we add headcount. We will be more focused on costs across the board.
It makes the ride-Hailing giant the latest tech company to warn of a slowdown in hiring. Last week, Facebook told staff it would stop or slow the pace of adding midlevel or senior roles, while Robinhood is cutting 9% of its workforce.
The company will focus on achieving profitability on a free cash flow basis.
We have made a lot of progress in terms of profitability, but the goalposts have changed. We can get there quickly.
Demand for its rides business rebounded in the first quarter after a relaxing of Covid restrictions. The company relied on its Eat food delivery unit to boost sales.
The company posted a $5.9 billion loss due to a slump in its equity investments.
He said that market size is irrelevant if it doesn't translate into profit.
The segment should be growing even faster because investors are happy with the growth of the company. The company needs to get even bigger because of the growth opportunity in its freight business.
He called on staff to make it legendary. Go get it!
The full letter can be read below.
The team is called Team Uber.
I met investors in New York and Boston after earnings. The market is experiencing a shift and we need to react accordingly. I wanted to share my thoughts with you after my meetings were so clear. While investors don't run the company, they do own it and theyentrusting us with running it well. We can set the strategy and make the decisions, but we need to do so in a way that serves our shareholders and long term interests.
1. When uncertainty is high, investors look for safety. They know that we are the scaled leader in our categories, but they don't know how much that is worth. We need to show them the money. We have made a lot of progress in terms of profitability, but the goalposts have changed. Free cash flow is what it is about. We can get there quickly. Some companies are slow to pivot and put their heads in the sand. Many of them will not survive. You've spent your career in a bull run if the average employee is less than 30 years old. The next period will require a different approach. We are not going to put our heads in the sand. We'll meet the moment.
2. We are a completely different animal than other platforms. They are excited about the pace of innovation, how quickly we are recovering, and huge growth opportunities like Taxi. While they acknowledge that we are winning, they don't know the size of the prize. We have to show them.
3. Delivery has performed better than many other winners of the Pandemic and investors are happy about it. Delivery should be growing even faster, I firmly believe, so that was a bit of a surprise for me. We need to answer both of the questions with strong results.
4. Freight is loved by investors who asked about it. Less than 10% of them asked about it. Freight needs to get bigger so that investors will love it as much as I do.
5. Meeting the moment means making trade-offs. Some initiatives that require substantial capital will be slowed because of the higher hurdle rate for our investments. Before we go big, we have to make sure our economics work. The least efficient spend will be pulled back. We will be deliberate about when and where we add headcount. We will be even more focused on costs.
6. The Power of the Platform is a structural advantage that sets us apart. Our strategy here is simple: bring in consumers on either Mobility or Delivery, encourage them to try the other, and tie everything together with a compelling membership program. The advantage is obvious, but we need to show the value of the platform in real dollar terms. Market size is irrelevant if it doesn't translate into profit.
7. We need to do all of the above while still delivering an outstanding and differentiated experience for consumers and earners. Whether someone is booking rides for a summer trip with friends, or a new parent relying on an app for everything from groceries to dinner, it's up to us to make every interaction excellent. Anyone who comes to the ride-sharing service to earn will be the same. We became earner-centered in a way we had never been before. We are thinking deeply about their experience and putting ourselves in their shoes by driving, delivering and shopping ourselves. Because of hundreds of improvements in this area, people who want to work from home are now coming to us first, where they can benefit from our scale, diversity, and commitment to treating them with respect.
I have never been more certain that we will win. It is going to demand the best of our genes: hustle, grit, and category-defining innovation. We will have to pull back in some places. We will have to do more with less. It will be epic, but it will not be easy. Remember who we are. We are the company that changed the world forever. The next chapter of our story should be written by us and we should make it legendary.
Go get it!
There is a person named Dara.
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