Lyft said Thursday it's cutting 13% of its workforce, impacting all teams.
In an email to employees obtained by CNBC, CEO Logan Green and President John Zimmer pointed to what they called "a probable recession sometime in the next year" and rising rideshare insurance costs. But Lyft is not currently changing the guidance it gave last quarter.
Shares of Lyft were slightly negative Thursday. Shares have fallen almost 68% year-to-date, bringing its market cap under $5 billion.
Lyft said it has just over 5,000 employees.
Green and Zimmer said in the email that the layoffs "were based on deprioritized initiatives, an effort to reduce management layers, broader savings goals, and, in some cases, performance trajectory."
For laid-off workers, Lyft promised ten weeks of pay, healthcare coverage through the end of April, accelerated equity vesting for the Nov. 20 vesting date and recruiting assistance. Workers who had been there for more than four years will get an extra four weeks of pay, they added.
Lyft is not the only tech company to announce cuts or a hiring freeze recently. Netflix, Spotify, Coinbase, Shopify and most recently payments company Stripe have announced layoffs. And Amazon, Google parent Alphabet and Facebook owner Meta have also taken measures to bring their expenses in check.
"We are not immune to the realities of inflation and a slowing economy," Green and Zimmer wrote. "We need 2023 to be a period where we can better execute without having to change plans in response to external events — and the tough reality is that today's actions set us up to do that."
Here's the full email from Green and Zimmer:
Team,
We just sent an invitation for everyone to join us for an all-hands at 11:00 am PT to share some tough news. Despite efforts to avoid this day, we've made the difficult decision to lay off 13% of the team. Additionally, we are pursuing a divestiture (sale) of our first-party vehicle service business, and in that case we do expect most of those team members will be offered roles from the acquiring company.
We know today will be hard. To help provide initial context, we want to share how we made this decision, how we're supporting departing team members, and what to expect over the coming days.
What's happening
There are several challenges playing out across the economy. We're facing a probable recession sometime in the next year and rideshare insurance costs are going up. We worked hard to bring down costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives. Still, Lyft has to become leaner, which requires us to part with incredible team members.
The layoffs impact every organization in the company, and were based on deprioritized initiatives, an effort to reduce management layers, broader savings goals, and, in some cases, performance trajectory.
We are confident in the overall trajectory of the business. It was important to take these proactive actions to ensure we can accelerate execution, stay focused on the best opportunities to drive profitable growth, and deliver strong business results in 2023 and beyond.
Support for departing team members
We understand the real impact this decision has on departing team members. Lyft will offer support to departing team members:
· 10 weeks of pay.
· Healthcare coverage through April 30, 2023, including access to Modern Health.
· Accelerated equity vesting for the November 20 vesting date.
· Recruiting assistance, including coaching sessions on resumes and interviews.
Team members with 4+ years with Lyft will receive an additional four weeks of pay.
Moving forward
Our priority today is taking care of departing team members, who for many of us are also friends. To those team members, although we know no words are sufficient, thank you for everything you have done for the Lyft community, mission, and business.
We are not immune to the realities of inflation and a slowing economy. We need 2023 to be a period where we can better execute without having to change plans in response to external events — and the tough reality is that today's actions set us up to do that. It's our responsibility to take ownership of these decisions and, in the end, protect the future we're building for the drivers and riders we serve.
Logan & John
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