Global ride hailing major Uber will now focus on free cash flows and cost cutting to drive profitability, CEO Dara Khosrowshahi told employees in a letter on Sunday. Post the company’s January-March quarter earnings, where the company posted a loss of USD 5.9 billion, Khosrowshahi said he met several investors, which has made it clear that the market is experiencing a seismic shift, requiring Uber to react accordingly.
NSE
After years of uncertainty on the back of the pandemic and now geopolitical tensions, Uber’s CEO says the message from investors is clear: Uber needs to show them the money.
“We have made a ton of progress in terms of profitability, setting a target for USD 5 billion in Adjusted EBITDA in 2024, but the goalposts have changed. Now it's about free cash flow. We can (and should) get there fast,” Khosrowshahi wrote.
Also Read
| Ola, Uber may soon have these additional rules to follow as consumer complaints pile up
Investors see how large the addressable market for the ride hailing business is, but don’t understand how that translates into significant profits and free cash flow and Uber needs to show them that, he further wrote.
Khosrowshahi also said that they need to show investors why Uber’s food delivery business UberEats is a good business with strong results and show them the value of freight as a business segment.
“Investors who asked about Freight love Freight. However, less than 10 percent of them asked about it. Freight needs to get even bigger so that investors recognise its value and love it as much as I do,” he wrote in the letter.
Also Read | Storyboard18 | 'We don't like to think of ourselves as a premium brand,' Uber's president Prabhjeet Singh
And to address this seismic shift in the market and give investors their answer, the need of the hour, according to Khosrowshahi is cost cutting.
“Some initiatives that require substantial capital will be slowed. We have to make sure our unit economics work before we go big. The least efficient marketing and incentive spend will be pulled back. We will treat hiring as a privilege and be deliberate about when and where we add headcount. We will be even more hardcore about costs across the board,” he told employees.
Essentially, the strategy is this – Uber wants to be able to bring more customers to its platform – be it through ride hailing or delivery – get them to try other services it offers and to keep them on, tie everything together with a ‘compelling membership program’.
“We are serving multi-trillion dollar markets, but market size is irrelevant if it doesn't translate into profit,” he added.
(Edited by : Priyanka Deshpande)
First Published:May 9, 2022 3:29 PM IST
