Uber narrows loss as hunger for food delivery business grows during pandemic
Uber’s thriving food delivery business, aided by a bump in home deliveries during lockdowns, helped the company counteract a slow quarter for ride-hailing bookings amid the pandemic.
The company announced betterthan-expected earnings in its first quarter of 2021, despite reporting its ride bookings were flat from the previous quarter and had decreased year over year.
The company also took a hit this quarter to the tune of $600m, after it had to settle with its more than 70,000 UK drivers and provide them with more benefits.
Uber’s total number of ride bookings, which plummeted over the last year due to the pandemic, remained roughly flat from the last quarter and down 38% from the previous year.
But Uber said its delivery bookings rose 166% from the same period last year.
“Uber continues to forge new ground despite headwinds from the pandemic,” said Alyssa Altman, a transportation analyst at technology consultancy Publicis Sapient. “The long-term outlook is strong. The balance of the business will change as people come out of the pandemic; moving back to a higher percentage of revenue coming from ride hailing.”
She added that this may happen faster in the US, where there is widespread vaccine access and faster recovery, compared to other parts of the world.
Excluding the $600m charge, Uber reported $3.5bn in first-quarter revenue, ahead of an average analyst estimate for $3.29bn, according to Refinitiv data. The company’s stock price rose slightly, by 1%, in after hours trading.
Uber posted an adjusted $359m first-quarter loss before interest, taxes, depreciation and amortization – a metric that excludes one-time costs, including stock-based compensation, narrowing losses by nearly $100m from the previous quarter. This was lower than the expected loss of $452m, Refinitiv data showed.
Uber has promised to be profitable on that metric by the end of the year, three months after its smaller rival Lyft, which on Tuesday said it would report sustained adjusted profits starting in the third quarter.
The $600m UK charge is a sign of the costs the company could face if it were to provide similar benefits to US drivers, a measure it is pushing for with US regulators to avoid even costlier regulation that would turn gig workers into employees.
Uber on Wednesday said it had 3.5 million active drivers and food-delivery workers on its platform during the first quarter, the majority of whom work in the United States.
Uber’s first-quarter results come on the heels of the company’s announcement that last month that March had been the best month in the company’s nearly 12-year history, with its mobility business reporting the most bookings since the start of the pandemic and delivery demand outstripping driver supply.
Revenue at Uber’s delivery segment, which includes its Uber Eats restaurant delivery business, more than tripled from last year and grew 28% from last quarter to $1.7bn.
Some analysts have questioned whether the delivery boom would last once customers were no longer homebound and businesses and restaurants reopened.
But Uber in the past said it expected many of its Uber Eats customers to remain loyal and in an investor presentation on Wednesday showed delivery booking in Sydney and New York had increased as those cities were reopening.