Uber Sees Recovery in Ride Demand, Reports Quarterly Profit as Food Delivery Remains Strong

Uber on Wednesday reported its second quarterly operating profit as demand for its ride-hailing service approached pre-pandemic levels and its food delivery business turned profitable for the first time.

Shares were up nearly 6 percent in after-hours trading.

The company’s first-quarter outlook fell short of Wall Street expectations as the Omicron coronavirus variant dampens travel, but Uber Chief Executive Dara Khosrowshahi said business had started picking up into February.

“While the Omicron variant began to impact our business in late December, mobility is already starting to bounce back, with gross bookings up 25 percent month-on-month in the most recent week,” Khosrowshahi said in a statement.

Uber’s earnings release came shortly before the company’s first-ever investor day, to be held on Thursday in New York. Executives on Wednesday said they would provide more details on their long-term strategy and how Uber could expand its current business.

For the fourth quarter of 2021, Uber reported $5.8 billion (roughly Rs. 43,460 crore) in revenue.

The California-based company reported adjusted earnings before interest, taxes, depreciation, and amortisation, a measure that excludes one-time costs, primarily stock-based compensation, of $86 million (roughly Rs. 645 crore) for the quarter ended December 31, significantly ahead of analyst expectations for $62 million (roughly Rs. 465 crore).

That compared with a loss on the same basis of $454 million (roughly Rs. 3,400 crore) a year ago. It marked the company’s second profitable quarter since it first reported positive adjusted EBITDA in the third quarter.

Uber’s delivery unit, largely made up of its Uber Eats restaurant service, posted its first adjusted EBITDA profit of $25 million (roughly Rs. 190 crore), showing Uber’s ability to scale the once loss-making operation against strong competition.

Steady delivery bookings signal that the rebound in rides has not come at the expense of food delivery, with consumers sticking to the service even as the economy reopens.

Uber executives told investors on a conference call that the company was increasingly able to gain new customers for its Eats platform through its ride-hail business since the company merged its services into one app.

“The diversification is really coming into play,” Khosrowshahi said, adding that its business remained resilient even during the Omicron wave thanks to delivery orders.

Khosrowshahi said the company had to improve its restaurant base in the US suburbs to catch up with larger delivery rival DoorDash.

Rides recovery in the fourth quarter was driven by strong demand for airport trips, which tripled compared to last year. Airport rides are among the most profitable routes for Uber.

Uber also posted net income of $892 million (roughly Rs. 6,680 crore), as it revalued its stakes in Southeast-Asian Grab and self-driving company Aurora Innovation Inc, just a quarter after it reported a $2.42 billion (roughly Rs. 18,130 crore) net loss driven by its stake in Chinese ride service Didi and stock-based compensation.

The company significantly increased its marketing spend in the fourth quarter, upping sales, and marketing expenses by 36 percent on a quarterly basis. Uber launched several large Uber Eats advertising campaigns in the US market at the end of last year.

Uber forecast lower-than-expected adjusted profit in the first three months of 2022, as the Omicron coronavirus variant dampened travel demand in January. Smaller US rival Lyft Inc issued a similar warning on Tuesday.

Uber forecast first-quarter adjusted EBITDA to be between $100 million (roughly Rs. 750 crore) and $130 million (roughly Rs. 975 crore), compared with analysts’ estimates for nearly $150 million (roughly Rs. 1,120 crore).

© Thomson Reuters 2022