Ride-hailing company Lyft has announced a restructuring plan to reduce operating costs, which involves terminating approximately 1,072 employees, representing 26% of its workforce. In addition, Lyft has scaled back hiring and eliminated over 250 open positions. The plan is expected to result in cost savings, which will be used to support service-level improvements for riders and drivers.
Lyft estimates that it will incur a cost of approximately $41 million to $47 million related to severance and employee benefits in the second quarter of 2023, as a result of the plan. The company will also incur additional costs related to stock-based compensation and payroll tax expenses, which will be disclosed in an amendment to its 8-K filing for the same quarter. However, these costs cannot be estimated at this time, as they depend on the company's future stock price.
Lyft's restructuring costs will be excluded from its Adjusted EBITDA, consistent with its past presentation. The company will provide more details about its first quarter of 2023 earnings and the restructuring plan during its earnings call on May 4, 2023.
