Tier has announced that 22% of its staff across HQ and regional roles will be made redundant today as the operator strives for profitability.
The decision comes amid a year of high inflation and reduced consumer demand which has forced the operator to cut its workforce. Tier acts under the assumption that 2024 will see similar demand to 2023.
“It has been a challenging year for many businesses and individuals. We have had to pivot from a strategy of rapid growth to the pursuit of profitability,” Tier said in a statement.
Commenting on the announcement is Today Co-Founder and Investor Sean Flood: “Making the very difficult decision to reduce a workforce is never easy and this time of year is even more difficult for a founder.
“Market demand for products and technology in the mobility sector is growing and I believe it will continue to do so, but it’s imperative for investors and operators to build businesses based not only on future market demand, but on sound business fundamentals.”
The operator is on track to improve its adjusted earnings before interest, taxes, depreciation and amortisation (Adj EBITDA) from -63% in 2022 to -15% in 2023. Tier has also achieved profitability for the last five months and anticipates that for 2023 it will be profitable on an annual basis for 80% of its markets including Germany, the UK and France.
“However, as we look to continue this upward trajectory in 2024, and to achieve profitability on an annual basis, we recognise that we still need to make adjustments to our business and efficiency,” Tier said.
Zag industry expert and former Tier Country Manager Lars Christian Grødem-Olsen, commented: “Operators have an amazing talent base. The paradox is that managing and reducing that valuable group of individuals is also key in becoming profitable in a low-margin industry.”
The layoffs form part of Tier’s decision to focus on its European performance, and follow its decision to halt operations in North America via the sale of Spin to shared micromobility operator Bird.
While Tier has previously taken a more growth-driven approach through its various acquisitions such as Pushme and Coup’s e-moped fleet, the operator is reverting back to its conservative stance, Industry Consultant Aléxandre Tziampazis told Zag.
“The company is back to lean operations with a sustainability and profit focus. Rather than taking the risk of going big, Tier is going home,” said Aléxandre.
“Operators have overhired to grow and it hasn’t been sustainable. I’m afraid it’s going to be a tough winter, and that we will see more layoffs going forward,” Lars added.
Speaking of those leaving Tier today, Lawrence Leuschner, CEO and Co-founder, said on LinkedIn: “The people leaving us today are extremely passionate, driven individuals who will be an asset to any company. The decision we have made today has nothing to do with their performance and should not detract from how much they gave to this company.
“I remain truly grateful to them for choosing to join our mission to change mobility for good and I want to thank them for everything they have done for Tier.”