On Thursday, Lyft Inc. shared more information regarding the layoffs it announced last week. According to a filing with the Securities and Exchange Commission, the ride-hailing company is laying off 1,072 employees, which accounts for about 26% of its workforce. Furthermore, it has eliminated over 250 open positions. In the second quarter, Lyft anticipates a cost of $41 million to $47 million for severance and other employee benefits. Additionally, the company expects to face other expenses associated with stock-based compensation and payroll taxes. In the near future, Lyft intends to disclose those expenses in an amended filing in the second quarter.
The company’s layoffs come as a consequence of the covid-19 pandemic, which has severely impacted the ride-hailing industry. Social distancing measures, lockdowns, and reduced demand for non-essential transportation have resulted in a steep decline in ride demand. Lyft’s customer base has decreased dramatically due to fewer commuters requiring rideshare services. The company has since turned to new offers such as delivery services and rental e-bikes to maintain its business.
Lyft announced the layoffs on April 29 alongside its financial results for the first quarter. The results showed a first-quarter loss of $398.1 million and revenue of $955.7 million. This loss is an increase of 36.5% compared to last year’s $244.7 million loss. Furthermore, Lyft’s shares have dropped by 9.2% in the past three months due to the ongoing pandemic. The shares closed at $30.54 on May 13, marking a total decline of 11.6% year to date.
Despite the loss, Lyft managed to grow its revenue by 23% year-on-year compared to last year’s $776 million. Moreover, its active riders increased by 3% to reach 21.2 million users. Lyft’s filing did divulge a comprehensive strategy to increase its revenue by reducing its operating expenses. The need to release employees became evident as Lyft faced mounting expenses and was unable to implement cost-cutting measures due to the negative impact the pandemic has had on its business.
Lyft’s decision to lay off a sizable portion of its workforce positions the company to better adapt to the current landscape amid the pandemic. The ride-hailing industry, like many others, has been affected significantly by the unprecedented circumstances covid-19 has brought about. Consequently, Lyft, as well as other ride-sharing companies such as Uber, have been forced to make difficult decisions, such as letting go of employees and restructuring operations. In the midst of an uncertain global economy, it is crucial for businesses to act quickly and reevaluate their strategies to survive and thrive.
Lyft’s reduction in workforce reflects a broader trend in the tech sector, as numerous tech giants including Airbnb, GoDaddy, and Techstars have also experienced workforce reductions. Last week, Uber announced it would be laying off 14% of its workforce, amounting to 3,700 employees, in addition to implementing a hiring freeze. Furthermore, the company’s CEO, Dara Khosrowshahi, is waiving his base salary for the rest of the year. These developments underscore the extent to which the tech industry has been affected by the pandemic.
Although the road to recovery for Lyft and other companies in the ride-hailing industry remains uncertain, the company has begun to adapt to the new reality by diversifying its business. Lyft recently launched “Essential Deliveries,” a delivery service targeting organizations and governments that require immediate transportation of essential goods, such as medical supplies and groceries. This move signifies the company’s efforts to adjust to the ongoing challenges and pivot its business to be more resilient in the face of the crisis.
Additionally, Lyft has taken steps to address employee and customer safety concerns. The company is now providing its drivers with sanitation supplies, such as face masks, hand sanitizers, and disinfectant. Furthermore, it has implemented new policies to ensure both passengers and drivers practice adequate social distancing and maintain good hygiene in shared vehicles.
In conclusion, Lyft’s latest move is a prime example of a company reassessing its business strategy to remain competitive in the face of unprecedented challenges. By laying off 26% of its workforce and taking steps to adapt to the current climate, the company is positioning itself for a more stable, albeit unpredictable, future. As the global situation continues to evolve, it is likely that Lyft and other ride-hailing companies will continue to face hurdles and make difficult decisions, all with the aim of ensuring their survival and eventual growth.
