Lyft Inc. is reportedly planning to let go 30% of its workforce, or about 1,200 employees, in a bid to halve its operating expenses.

The Wall Street Journal reported the plan today, citing sources familiar with the matter. Lyft confirmed the upcoming round of layoffs but didn’t specify how many jobs will be cut.

“We need to be a faster, flatter company where everyone is closer to our riders and drivers,” newly appointed Lyft Chief Executive Officer David Risher wrote in a memo to employees. “And we need to bring our costs down to deliver affordable rides, compelling earnings for drivers, and profitable growth.”

The development comes a few weeks after the Lyft reported mixed fourth-quarter financial results. The ride-hailing provider generated $1.18 billion in revenue during the last three months of 2022, slightly more than what analysts had projected. But it fell short of profitability expectations, posting an adjusted loss of 74 cents per share.

Lyft is facing significant competitive pressure from larger rival Uber Technologies Inc, which had a strong fourth quarter. Uber grew revenues 49% year-over-year, to $8.6 billion, in the three months ended Dec. 31. Analysts had expected sales of $8.5 billion.

Besides the ride-hailing segment where it competes with Lyft, Uber also maintains a presence in several other markets. It has a significant food delivery business and provides freight management software. Lyft, in contrast, generates most of its revenue from ride-hailing services.

According to the Journal’s sources, Lyft is hoping to slash operating expenses by 50% through the forthcoming workforce reduction. “We intend to use these savings to invest in competitive pricing, faster pick-up times, and better driver earnings,” Risher detailed in today’s memo to employees. “All of these require us to reduce our size and restructure how we’re organized.”

Lyft plans to notify affected employees next Thursday. The company will provide 10 weeks of severance pay, additional weeks of pay for workers who joined more than four years ago and healthcare coverage through Oct. 31. Lyft also intends to accelerate equity vesting.

The workforce reduction is the third the company has announced in the past year. Previously, Lyft let go 700 workers in November, which amounted to a 13% headcount reduction at the time. Earlier, it cut 60 jobs last July after shuttering parts of its car rental business.

Lyft is set to report first-quarter financial results on May 4. The company today reaffirmed the guidance it issued in February, which projects quarterly revenues of approximately $975 million. Lyft is expecting adjusted EBITDA, or earnings before interest, taxes, depreciation and amortization, of between $5 million and $15 million. 

Image: Lyft