Read part of the memo Lyft's cofounders sent to employees as the company begins laying off nearly 700 staffers

• Lyft plans to lay off 13% of its team, or around 700 employees.
• Cofounders Logan Green and John Zimmer announced the layoffs in a memo to staff on Thursday.

Amid a gloomy outlook for the fourth quarter of the year and a probable looming recession, scores of tech companies have decided to bunker down and reduce spending in order to weather the economic headwinds.

Rideshare startup Lyft is the latest casualty of this Big Tech winter, as it announces a massive round of layoffs to cut costs.

In a memo on Thursday, Lyft cofounders Logan Green and John Zimmer wrote that the company would be laying off 13% of the team, or around 700 employees, in addition to looking to sell its first-party vehicle service business. A snippet of the memo was made public.

"We worked hard to bring down costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives," the memo states. "Still, Lyft has to become leaner, which requires us to part with incredible team members."

Lyft said the layoff plan "involves the termination of approximately 683 employees," representing 13% of the workforce. Lyft estimates that it will incur approximately $27 million to $32 million of restructuring and related charges related to employee severance and benefits costs in the fourth quarter of 2022, according to a regulatory filing on Thursday.

Lyft's woes are especially jarring as arch rival Uber Technologies, Inc. reported robust revenues in the third quarter of 2022, thanks to its ride-hailing and food delivery services.

Lyft will announce its third quarter results after the close of business on November 7, according to a company filing. The company confirmed that there are "no changes in the previously issued guidance regarding third quarter 2022 revenues, contribution margin and Adjusted EBITDA, or our 2024 financial targets for $1 billion in Adjusted EBITDA with more than $700 million in Free Cash Flow," per the Lyft memo.

The company's share prices have plummeted almost 70% year to date.

Lyft did not immediately respond to Insider's request for comment, which was sent outside business hours.

Read a snippet of the memo sent to staffers below.

Team,

We just sent an invitation for everyone to join us for an all-hands at 11:00 am PT to share some tough news. Despite efforts to avoid this day, we've made the difficult decision to lay off 13% of the team. Additionally, we are pursuing a divestiture (sale) of our first-party vehicle service business, and in that case we do expect most of those team members will be offered roles from the acquiring company.

We know today will be hard. To help provide initial context, we want to share how we made this decision, how we're supporting departing team members, and what to expect over the coming days.

What's happening

There are several challenges playing out across the economy. We're facing a probable recession sometime in the next year and rideshare insurance costs are going up. We worked hard to bring down costs this summer: we slowed, then froze hiring; cut spending; and paused less-critical initiatives.Still, Lyft has to become leaner, which requires us to part with incredible team members.

The layoffs impact every organization in the company, and were based on deprioritized initiatives, an effort to reduce management layers, broader savings goals, and, in some cases, performance trajectory.

We are confident in the overall trajectory of the business. It was important to take these proactive actions to ensure we can accelerate execution, stay focused on the best opportunities to drive profitable growth, and deliver strong business results in 2023 and beyond.

Support for departing team members

We understand the real impact this decision has on departing team members. Lyft will offer support to departing team members:

• 10 weeks of pay.

• Healthcare coverage through April 30, 2023, including access to Modern Health.

• Accelerated equity vesting for the November 20 vesting date.

• Recruiting assistance, including coaching sessions on resumes and interviews.

• Team members with 4+ years with Lyft will receive an additional four weeks of pay.

Moving forward

Our priority today is taking care of departing team members, who for many of us are also friends. To those team members, although we know no words are sufficient, thank you for everything you have done for the Lyft community, mission, and business.

We are not immune to the realities of inflation and a slowing economy. We need 2023 to be a period where we can better execute without having to change plans in response to external events — and the tough reality is that today's actions set us up to do that. It's our responsibility to take ownership of these decisions and, in the end, protect the future we're building for the drivers and riders we serve.

Logan & John