DoorDash cofounder and CEO Tony Xu told employees Wednesday that the company is laying off 1,250 employees as delivery companies continue to adjust to the drop of COVID-19 restrictions.
Xu said DoorDash’s growth has tapered off since the height of the pandemic when many residents around the country used such services while they were sheltered inside and travel was limited.
“While our business continues to grow fast, given how quickly we hired, our operating expenses — if left unabated — would continue to outgrow our revenue,” Xu said in his message to employees.
“We have and will continue to reduce our non-headcount operating expenses, but that alone wouldn’t close the gap. This hard reality ultimately led me to make this painful decision to reduce our team size.”
Xu said the pandemic presented DoorDash with an opportunity to grow quickly with the dramatic demand for delivery services.
“We sped up our hiring to catch up with our growth and started many new businesses in response to feedback from our audiences,” Xu said. “Most of our investments are paying off, and while we’ve always been disciplined in how we have managed our business and operational metrics, we were not as rigorous as we should have been in managing our team growth. That’s on me.”
Xu said laid-off employees will receive 17 weeks of compensation, as well as their February 2023 stock vest, along with healthcare benefits through March 31.
In May, DoorDash authorized a buyback of up to $400 million of its shares after its board of directors approved the repurchase of the company’s Class A common stock. The company said in a regulatory filing that it made move to offset dilution from its employee stock-compensation program.
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