SEC questions DoorDash about removing overhead from adjusted financial metrics

DoorDash to lay off 1,250 employees as CEO says costs grew too fast

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Food-delivery platform DoorDash Inc. plans to lay off about 1,250 employees, becoming the latest technology company to admit that it grew expenses too rapidly for the current climate.

Chief Executive Tony Xu announced the cuts in a Wednesday morning message to employees that was later posted to the company’s corporate blog. The company had over 8,600 employees as of the end of last year, not including delivery people — known as “Dashers” — who will not be affected.

Xu said he was “truly sorry” for the move and that he expected it to “come as a shock, especially because our business remains strong and continues to grow.”

He noted that DoorDash

was “actually undersized” before the pandemic and said that executives moved to speed up hiring as COVID-19 created greater demand for delivery.

“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,” he said in the post. “That’s on me. As a result, operating expenses grew quickly.”

Shares of DoorDash were up nearly 4% in premarket trading Wednesday.

Xu also pointed to the economic environment as he sought to explain the cuts.

“Our business has been more resilient than other e-commerce companies, but we too are not immune to the external challenges and growth has tapered vs our pandemic growth rates,” he said. “While our business continues to grow fast, given how quickly we hired, our operating expenses – if left unabated – would continue to outgrow our revenue.”

DoorDash joins a list of technology companies that have recently eliminated positions due to an adverse macroeconomic climate. Others include Meta Platforms Inc.
Lyft Inc.
Roku Inc.
and Twitter.

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