Uber’s quarterly sales tumble

Uber Technologies Inc. generated more revenue from delivering food than transporting people for the first time last quarter, but it failed to offset a steep and prolonged decline in ridership brought on by the coronavirus pandemic.

Sales fell 29 per cent in the second quarter to US$ 2.24 billion, ending a decade of unchecked growth. The loss in the quarter also widened, but Uber maintained Thursday that it will achieve its goal of turning an adjusted profit by the end of next year. Food delivery has become a central part of that strategy, even more so after the US$ 2.65 billion deal to buy Postmates Inc.

The number of people using Uber’s platform each month, a closely watched measure of engagement, shrank 44 per cent in the second quarter to 55 million customers, well below analysts’ expectations of a decline of about seven per cent.

The sharp drop in ridership in the second quarter mirrors the overall contraction of the travel industry. With many retailers, schools and workplaces closed or at reduced capacity, transportation use will probably remain low for the foreseeable future, and Uber could be “permanently impaired,” according to Daniel Morgan, a portfolio manager at Synovus Trust Co. “Continued high COVID-19 case levels will likely weigh on ride- sharing demand throughout 2020 and into 2021,” he wrote in a note to clients.

In an acknowledgment of the long- term consequences of the pandemic, Uber said this week that its own employees could work from home until the end of June 2021. As the effects weigh on the business, Chief Executive Officer Dara Khosrowshahi has turned to cost- cutting. He eliminated about a quarter of the workforce in May and shuttered dozens of offices.

Uber even pared back its global food delivery operation by exiting more than a half- dozen markets to make room for expansion in more developed ones. After bidding unsuccessfully for Grubhub Inc., Uber agreed to buy Postmates last month in a bid to add more U.S. customers.

“It was a tough quarter, but I’m incredibly proud,” Khosrowshahi said on a conference call to discuss the results.

“We pivoted in an incredible way.”

In the quarter that ended in June, gross bookings from delivery doubled to US$6.96 billion.

Mobility, which is predominantly made up of ride- hailing but also includes scooter rentals, declined 75 per cent to US$3.05 billion.

Many investors pay close attention to gross bookings to track the total value of spending with Uber.

Analysts expected less from delivery and more from ride-hailing in the quarter.