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January 29, 2020 3:30 PM, EST

Lyft to Cut 2% of Staff in Pursuit of a Profit Next Year

Signage is displayed during the Lyft IPO at the company's service center in Los Angeles in March 2019.Signage is displayed during the Lyft IPO at the company's service center in Los Angeles in March 2019. (Kyle Grillot/Bloomberg News)

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Lyft Inc. will eliminate about 90 jobs as the unprofitable ride-booking company seeks to deliver on a promise to stop losing money by the end of next year.

The dismissals represent about 2% of employees and affects the marketing and sales departments. The San Francisco-based company said despite the cuts, it intends to hire more than 1,000 people this year.

“We’ve carefully evaluated the resources we need to achieve our 2020 business goals, and the restructuring of some of our teams reflects that,” Alexandra LaManna, a spokeswoman for Lyft, said in an emailed statement.

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The stock was down 1.8% at 3 p.m. in New York. The cuts were reported earlier Jan. 29 by the New York Times.

Lyft has struggled since going public last year. Like Uber Technologies Inc., Lyft built a multibillion-dollar business by heavily subsidizing the cost of rides for customers and offering bonuses to drivers. Both companies have reduced those subsidies in recent months as a response to increased pressure from investors to turn a profit.

Uber, the most-used ride-hailing app in the U.S., embarked on a larger workforce reduction last year, when it eliminated more than 1,000 jobs. The two companies are also battling a new California law that seeks to reclassify their drivers as employees instead of independent contractors. Some analysts have estimated the change could result in price hikes of as much as 30%.

Lyft plans to report 2019 financial results Feb. 11. It previously said it expects 2019 revenue to be $3.57 billion to $3.58 billion, citing increased ridership. The company has pledged to turn an adjusted profit, excluding taxes and other expenses, by the fourth quarter of 2021.

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