Some tech companies are tightening their belts as they adjust to ongoing financial turbulence, with Uber and Meta both looking to reduce expenses and hiring.
Uber CEO Dara Khosrowshahi told employees in an internal email that the ride-hailing service is going to try harder to stop losing so much money. Khosrowshahi’s email, obtained by CNBC’s Deirdre Bosa, begins, “It’s clear that the market is experiencing a seismic shift and we need to react accordingly.”
The memo says hiring will be more cautious and promises cost cutting.
Citing the need to reassure investors amid market uncertainty, Khosrowshahi’s missive says, “Channeling Jerry Maguire, we need to show them the money. We have made a ton of progress in terms of profitability, setting a target of $5 billion in adjusted EBITDA in 2024, but the goalposts have changed. Now, it’s about free cash flow.”
Uber last week reported a net loss of $5.9 billion, of which $5.6 billion was due to investment losses in other companies, specifically Grab, Aurora, and Didi. Stock-based compensation expenses also cost it $359 million.
That’s nearly as much as the $6.77 billion Uber lost in 2020, but shy of the $8.51 billion set alight by the company in 2019. Somehow in 2021, the company managed a net income of $892 million.
Uber’s stock is down 46 percent over the past six months. The ride-hailing biz did not immediately respond to a request for comment.
Meta Platforms’ stock, meanwhile, is down 40 percent in the past six months. Much of that drop followed stalled audience growth, a weak revenue forecast, and the company’s annual revenue report in February in which the firm disclosed that its VR unit, Reality Labs, had spent $12.5 billion to earn $2.3 billion – a $10.2 billion loss and about as much its net income – building what will perhaps be a metaverse business.
We note that technology stocks, among other industries, are down in general; the S&P 500 just hit a 52-week low.
In April, Meta reportedly froze the hiring of entry-level and mid-level engineers, with limited exceptions, and has now expanded its hiring limitations.
“We regularly re-evaluate our talent pipeline according to our business needs and in light of the expense guidance given for this earnings period, we are slowing its growth accordingly,” a Meta spokesperson told The Register via email. “However, we will continue to grow our workforce to ensure we focus on long term impact.”
The Register understands Meta doesn’t have any immediate plans for layoffs and characterizes the move as a shift away from aggressive growth targets set at the beginning of the year. The company attributes its retrenchment to Apple’s iOS privacy restrictions, which hurt ad revenue, and to Russia’s invasion of Ukraine. Wall Street however is reportedly none too pleased with the firm’s VR spending, which was nearly $3 billion during the first three months of the year.
In Q1, 2022, Meta apparently recruited more engineers than it did during all of 2021. The ad biz added 5,800 hires, mostly in technical roles, and finished the quarter with 77,800 full-time employees, up 28 percent from the same period last year.
Things haven’t been great for companies that went public last year, either. According to CNBC, of 53 tech-related firms that went public in 2021 via IPO or direct listing, all but three are below their initial stock price and half are down more than 50 percent, including Robinhood, Coinbase and Rivian. ®