Uber Lays Off 435 People From the Engineering and Product Teams

For the second time in three months Uber is cutting staff in an effort to boost its bottom line.

The company confirmed on Tuesday that it has laid off 435 employees—265 from engineering and 170 from the product team. In July, the company cut 400 employees from its marketing department following the departure of Chief Operating Officer Barney Harford and Chief Marketing Officer Rebecca Messina.

“This is some bad news coming out of Uber as the company continues to go through some bumpy roads since its IPO,” said Dan Ives, analyst at Wedbush Securities. “This is not the news The Street wanted to hear, and it speaks to the challenges the company is contending with.”

Uber did not respond to a request for comment.

The latest layoffs come as CEO Dara Khosrowshahi works to leave all vestiges of Uber’s scrappy startup days behind. The ride-hailing giant has been working on proving a path to profitability while reporting billion-dollar losses since its May debut on the New York Stock Exchange. Meanwhile, Uber faces heavy pressure from the public and state regulators across the country to reclassify its drivers as employees—a move that could be detrimental to its financial model.

The cuts will affect arguably some of Uber’s most valuable teams—the people who work on the core ride-hailing app. The layoffs represent about 8% of the product and engineering staff, and the majority of the cuts will hit employees in the U.S. However, the cuts could be short lived. Uber confirmed that it was lifting a hiring freeze on both of those staffs, signaling the possibility of more hiring ahead.

“Every day is an opportunity to basically weigh in on where they can be more efficient and where they can cut operating expenses without having negative impact on growth,” said Tom White, analyst at D.A. Davidson. “Those are the two things investors want to see.”

The cuts will not affect Uber Eats or Uber Freight, both of which appear to be growing. Uber Eats reported a 140% increase in users and a 72% increase in revenue during the second quarter. Meanwhile, Uber recently announced plans to open a Chicago headquarters for its freight business, which serves more than 400,000 truckers.

Leading up to the layoffs, Khosrowshahi reportedly asked his executive leaders to re-evaluate their teams and decide if they needed to be restructured to avoid duplication in job roles and/or underperforming staff members, according to Tech Crunch. Chief Product Officer Manik Gupta and CTO Thuan Pham both chose to reduce their teams, the report says.

During Uber’s earnings call last month, Khosrowshahi said that the company reduced the size of its marketing team to to minimize overlapping job duties. He said Uber was “decentralized” in its early days as a startup, and that now, as a publicly traded company, they needed to make changes to make the company more effective.

“It’s not uncommon to see, particularly in the run up to an IPO… companies get overly aggressive with hiring,” Davidson said. “Now, as a public company, they have to be more accountable to public shareholders, so they’re more focused on the bottom line.”

In its second quarter, Uber lost $5.24 billion, which is five times more than its losses during the same quarter the previous year. Without accounting for one-time payments and costs associated with its IPO, the loss was $1.04 billion, still 18% more than during the same quarter last year.