Uber registers first profitable quarter a decade after launch

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Uber reported its first profitable quarter on an adjusted basis on Thursday since it launched more than a decade ago, with its two main segments, ride-hailing and restaurant delivery, both around the corner.

Company executives allied investor concerns about driver shortages, telling analysts that spending on incentives to get drivers back on the road after the pandemic had largely lagged the company.

But a massive drop in the value of its stake in Chinese ridesharing company Didi resulted in a net loss of $ 2.4 billion (about Rs.17,853 billion) in the third quarter, and Wall Street viewed Uber’s forecast for the fourth quarter as disappointing. Shares rebounded in after-hours trading, rising about 1 percent when Uber called Wall Street to alert.

The California-based company reported adjusted earnings before interest, taxes, depreciation, and amortization of 8 million for the quarter ended September 30, compared to a loss on the same basis of $ 625 million (approximately Rs 4,649 billion) a year ago.

Uber forecasts adjusted earnings of $ 25 million (approximately Rs 185 billion) to $ 75 million (approximately Rs 557 billion) for the final quarter of 2021. .

Despite adjusted earnings, Uber’s earnings report was a disappointment after smaller U.S. rival Lyft posted its second straight quarterly adjusted profit of $ 67.3 million (about 520 crore) and $ 75 million in the fourth on Tuesday Quarter.

Uber and Lyft’s businesses have yet to become profitable on a net basis, and the companies are refusing to provide any indication of when this might happen.

A depreciation of Uber’s stake in Chinese driver service Didi and share-based compensation payments resulted in a net loss that more than doubled year over year.

Didi, which went public in June, saw its market capitalization decline billions of dollars after China’s market regulator opened an antitrust investigation.

In real-world Uber business, total revenue rose 72 percent to $ 4.8 billion (approximately Rs.35,701 billion), above an average analyst estimate of US $ 4.4 billion (approximately Rs.32,723 billion), according to the company IBES data from Refinitiv.

Uber’s delivery business, which includes food and in-store deliveries to restaurants, has become the backbone of the company during the pandemic. Delivery sales rose steadily in the third quarter, suggesting that passenger growth wasn’t at the expense of the Uber Eats unit.

The company’s core restaurant delivery business, which accounts for around 96 percent of gross delivery bookings, was profitable on an adjusted EBITDA basis for the first time in the third quarter, Uber said.

Consumers were on the move in greater numbers in the third quarter, and the driver and courier base had grown by nearly 640,000 people since January, Uber said. The company spent more than $ 250 million (approximately Rs.1,858 billion) to lure drivers back after the pandemic.

Uber did not provide data comparing driver numbers to pre-pandemic levels. Uber chief Dara Khosrowshahi said the company plans to expand its driver base beyond 2019 levels to meet expected demand.

Ride bookings in the quarter were down more than 20 percent from the third quarter in 2019, but Uber said ride unit margins have returned to pre-pandemic levels.

“Investors want a significant rebound in gross bookings for Uber’s ride-hailing service, which is a high-margin business compared to UberEats,” said Haris Anwar, an analyst at Investing.com.

While Uber said it beat Halloween weekend 2019, demand from drivers traveling to parties and fun is around 80 percent of pre-pandemic levels, executives said during a phone call with analysts.

US airport travel, which is among the most profitable routes in the industry, has increased in recent weeks but has lagged behind all other travel categories, remaining around 33 percent below pre-pandemic levels.

© Thomson Reuters 2021

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