Uber sees its debt grow in third quarter
Uber Technologies more than doubled revenue from its delivery business in the third quarter, offering investors another bit of good news this week after an electoral victory in California.
However, the adjusted loss in the quarter widened, serving as a stark reminder of the challenges facing its business even after fending off efforts in its home state to extend employee benefits to its drivers.
The third- quarter loss, excluding interest, taxes and other expenses, deepened from a year ago to $625 million, though it was roughly in line with an average of analysts’ estimates compiled by Bloomberg. The loss narrowed from the previous quarter.
The coronavirus pandemic continues to limit travel spending. Sales for the ride-hailing company declined 18% to $ 3.1 billion, better than analysts expected. Uber didn’t address in the report Thursday whether it remains on track to turn an adjusted profit by the end of next year as projected.
The prospects for the business would be much worse if Uber hadn’t won a reprieve Tuesday from voters in California. The winning ballot measure, Proposition 22, will exempt Uber and other gig economy companies from a state law that sought to reclassify their drivers as em
ployees. Uber contributed more than $57 million to the ballot initiative, helping make it the most expensive in state history. Policymakers in Illinois, New York and elsewhere have been considering stronger labor protections.
The California measure sets minimum pay restrictions and gives drivers select perks, such as a health insurance stipend. Those will have an $18 million impact on adjusted earnings for Uber in 2022 compared with $91 million if the company were required to reclassify workers, according to a report by Morgan Stanley.
The adjusted loss in the third quarter, an increase of $ 40 million from last year, doesn’t account for an array of one- off expenses. Those include Covid-19 response and efforts to promote the California ballot measure. The net loss was $1.1 billion. Uber ended the quarter with $6.15 billion in cash, down from $10.9 billion at the end of last year.
Delivery continues to benefit from the pandemic. Sales for that division increased 125% in the third quarter, exceeding estimates of 113%. The category is mostly meal delivery, although newer products including groceries, prescriptions and packages are also included.
U ber ’ s p er forma nc e in each region mirrored the spread of the virus and government response there. Revenue surged in Asia but declined in Latin America. Sales from Uber’s largest market, the U. S. and Canada, decreased 30%.