In an email to employees obtained by CNBC, CEO Logan Green and President John Zimmer pointed to what they termed “a likely recession sometime in the next year” and the rising cost of ride insurance. But Lyft isn’t currently changing the guidance it provided last quarter.
Shares of Lyft were slightly negative on Thursday. The stock is down nearly 68% since the start of the year, pushing its market cap below $5 billion.
Lyft said it has just over 5,000 employees.
Green and Zimmer said in the email that the layoffs were “based on de-prioritised initiatives, an effort to reduce management layers, broader savings targets and, in some cases, performance trajectory.”
For laid-off employees, Lyft promised ten weeks of pay, health care coverage through the end of April, accelerated stock acquisitions before the Nov. 20 vesting date, and hiring assistance. Employees who have worked there for more than four years will receive an additional four weeks’ wages, she added.
“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 execute better without having to change plans in response to external events — and the harsh reality is that today’s actions have brought us to that.”
We’ve just sent out an invitation for everyone to join an all-hands at 11:00 a.m. PT to share tough news. Despite efforts to avoid this day, we made the difficult decision to lay off 13% of the team. In addition, we are pursuing a divestiture (sale) of our first-party auto service business, in which case we expect most of these team members to take up positions with the acquiring company.
We know it will be difficult today. To provide some initial context, we want to share how we made this decision, how we support departing team members, and what to expect in the coming days.
What is going on
There are several challenges in the economy. We will face a likely recession sometime in the next year and the cost of insurance for shared cars will go up. We’ve worked hard this summer to bring costs down: we slowed down and then stopped hiring; economize; and stopped less critical initiatives. Still, Lyft needs to get leaner, forcing us to say goodbye to incredible team members.
The layoffs affect every organization in the company and were based on de-prioritised initiatives, an effort to reduce management layers, broader savings targets and, in some cases, performance trajectories.
We have confidence in the overall trajectory of the company. 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 offers support to departing team members:
· 10 weeks wages.
· Health coverage through April 30, 2023, including access to Modern Health.
· Accelerated vesting of equity before the November 20 vesting date.
· Recruitment assistance, including coaching sessions on resumes and interviews.
Team members with 4+ years at Lyft receive an additional four weeks of pay.
Our priority today is looking after departing team members, who are also friends to many of us. To those team members, while we know words are not enough, thank you for all you’ve 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 execute better without having to change plans in response to external events – and the harsh reality is that today’s actions have brought us to that. It is our responsibility to take responsibility for these decisions and ultimately protect the future we build for the drivers and riders we serve.
Logan & John