Uber CEO Calls For Cost Cutting, Treating Hiring As Privilege Amid Seismic Market Shift: Report

Uber Technologies Inc UBER will cut costs to turn into a leaner business model to address a “seismic shift” in investor sentiment, CNBC reported on Monday, citing CEO Dara Khosrowshahi’s letter to employees.

What Happened: Khosrowshahi said Uber will cut spending on marketing and incentives and treat hiring as a “privilege” and be more “hardcore about costs across the board.”

The 52-year-old Khosrowshahi said there is a seismic shift in sentiments and Uber needs to ensure the company’s unit economics work before it goes big. 

The world's largest ride-sharing company will now focus on achieving profitability on a free cash flow basis rather than adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization).

“We have made a ton of progress in terms of profitability, setting a target for $5 billion in Adjusted EBITDA in 2024, but the goalposts have changed,” the report said, citing Khosrowshahi. 

“Now it’s about free cash flow. We can (and should) get there fast.”

Uber did not respond to Benzinga’s request for comment outside business hours.

See Also: Uber Plunges Follow Q1 Earnings Results: Here's Where To Watch For The Reversal

What Happened: Uber last week reported a massive first quarter earnings miss, with a loss of $3.04 per share, which came in well below the consensus estimate of a loss of 24 cents per share. 

The mobile-app-based transportation company however posted a top-line beat, reporting revenues of $6.85 billion, compared to the estimate of $6.09 billion.

Khosrowshahi said Uber has an advantage over rivals, but needs to show the value of the platform in real dollar terms. 

“We are serving multi-trillion dollar markets, but market size is irrelevant if it doesn’t translate into profit.”

Uber rival Lyft Inc LYFT last week issued second quarter sales guidance below analyst estimates.

Price Action: Uber closed 2.8% lower at $26.07 on Friday and is down 41% YTD. Shares were trading down 3.11% at $25.26 during Monday's premarket session, according to Benzinga Pro.

Photo: Courtesy of Fortune Brainstorm TECH on Flickr