Uber to cut down on hiring in bid to focus on profitable growth

Uber CEO Dara Khosrowshahi has told employees that the ride-share company will reduce hiring in response to a "seismic shift" in the market, CNBC reports.

Why it matters: Khosrowshahi is setting a new tone for the company as investors are growing wary of unprofitable businesses.

• He told investors last week on the company’s earnings call: "Our focus is on profitable growth."

What he's saying: "We will treat hiring as a privilege and be deliberate about when and where we add headcount," Khosrowshahi said in an email to employees late Sunday, per CNBC. "We will be even more hardcore about costs across the board."

• "After earnings, I spent several days meeting investors in New York and Boston," he wrote. "It’s clear that the market is experiencing a seismic shift and we need to react accordingly."
• "We have to make sure our unit economics work before we go big," he added. "The least efficient marketing and incentive spend will be pulled back."
• "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," Khosrowshahi noted, referring to adjusted earnings before interest, taxes, depreciation, and amortization.
• "Now it’s about free cash flow. We can [and should] get there fast."

The big picture: Uber shares dropped roughly 11% by Monday afternoon. The stock has fallen more than 40% this year.

• The company did not immediately respond to Axios' request for comment.

What to watch: Delivery has been a huge growth driver for Uber and helped it to weather the pandemic. But as questions about the strength of the economy loom, the company faces more pressure to manage that part of its business to weather any downturns.

• In his letter, Khosrowshahi wrote: "The primary [investor] questions were: 'Is Delivery a good business and why?' and 'What happens if we enter a recession?' We need to answer both of these questions with undeniably strong results."