Lyft plans to 'significantly reduce' workforce, CEO says

This March 29, 2019, file photo shows a sign for Lyft in Los Angeles. Lyft is reporting strong revenue growth but deep losses in its second quarter, a trend that it has so far been unable to reverse. The ride-hailing company on Wednesday, Aug. 7, posted revenue of $867.3 million, up 72% from the same time last year. (Ringo H.W. Chiu/AP Photo, File)

Lyft plans to "significantly reduce" its workforce, the company's new CEO David Risher told employees on Friday, in another round of layoffs as it struggles to turn a profit and pull off a turnaround.

In a company-wide memo, Risher said the cuts were aimed at making Lyft a "faster, flatter company where everyone is closer to our riders and drivers."

"I own this decision, and understand that it comes at an enormous cost," Risher continued. "We're not just talking about team members; we're talking about relationships with people who've worked (and played) together, sometimes for years."

The announcement follows Lyft's move in November to cut 13 per cent of its workforce, citing fears of a looming recession.

The Wall Street Journal reported that the latest job cuts would eliminate at least 1,200 positions or upward of 30 per cent of its staff. A Lyft spokesperson declined to provide details on the extent of the cuts.

"David has made clear to the company that his focus is on creating a great and affordable experience for riders and improving drivers' earnings," the spokesperson said. "To do so requires that we reduce our costs and structure our company so that our leaders are closer to riders and drivers. This is a hard decision and one we're not making lightly. But the result will be a far stronger, more competitive Lyft."

Lyft announced last month that Risher, an Amazon veteran, would take over as CEO in April, and that co-founders Logan Green and John Zimmer will step down from their management positions at the ride-hailing company.

Risher was the 37th employee of Amazon -- a company that has long been the model for the on-demand industry -- and he went on to become the e-commerce giant's first head of product and head of US retail.

For Lyft and Risher, the current challenges are immense. While Uber diversified its business beyond ride-hailing by delivering meals and grocery items, Lyft never did. That arguably hurt the company earlier in the pandemic when fewer customers were travelling but more were ordering items online.

Now Uber is showing renewed strength In its most recent earnings report, Uber said that it had its "strongest quarter ever," reporting a 49 per cent year-over-year increase in revenue. Lyft's latest earnings report, meanwhile, was unusually disappointing for Wall Street.

Lyft shares were up 6 per cent in midday trading Friday, but the company's stock is down roughly 70 per cent over the past year.