Uber Technologies Inc declared its first profitable quarter on an adjusted basis since its inception more than a decade ago, with both of its most crucial sectors, ride-hailing, and food delivery, turning the corner.
Company officials assuaged investor fears about a driver shortage by assuring analysts that the company’s spending on incentives to attract drivers back on the road following the epidemic was mostly behind it.
However, a $2.4 billion net loss in the third quarter was driven by a significant decline in the value of its stock in Chinese ride hailing giant Didi (DIDI.N), and Wall Street saw Uber’s fourth-quarter outlook as disappointing. After-hours trading saw a bounce in the price of the stock.
For the quarter ended Sept. 30, the California-based firm reported adjusted earnings before interest, taxes, depreciation, and amortization of $8 million, excluding one-time items such as stock-based compensation. This compares to a $625 million loss on the same basis a year earlier.
Uber anticipates a profit of $25 million to $75 million in the fourth quarter of 2021. According to Refinitiv statistics, analysts projected $114 million on average.
Despite the adjusted profit, Uber’s earnings release was a letdown after smaller U.S. competitor Lyft Inc disclosed its second consecutive quarterly adjusted profit of $67.3 million and said it projected adjusted EBITDA of $70 million to $75 million in the fourth quarter.
The operations of Uber and Lyft have yet to become profitable on a net basis, and the businesses refuse to speculate on when that could happen.
The decline in the value of Uber’s stake in Chinese ride-hailing operator Didi, along with stock-based bonus payments, resulted in a net loss that more than quadrupled from the previous year.
According to IBES statistics from Refinitiv, overall revenue for Uber’s real-world operation increased 72 percent to $4.8 billion, above the average analyst forecast of $4.4 billion.
During the epidemic, Uber’s delivery business, which includes restaurant meals and shop deliveries, emerged as the company’s backbone. Delivery revenue increased steadily in the third quarter, indicating that the company’s rider expansion did not come at the expense of its Uber Eats subsidiary.
According to Uber, the company’s core restaurant delivery business, which accounts for around 96 percent of delivery gross bookings, became profitable for the first time on an adjusted EBITDA basis in the third quarter.
Consumers traveled more in the third quarter, and Uber’s driver and courier base had expanded by approximately 640,000 people since January. The corporation spent more than $250 million to get drivers to return following the outbreak.
Uber could not share information on how the number of drivers compares to pre-pandemic levels. Uber CEO Dara Khosrowshahi stated that the business intends to expand its driver base beyond 2019 levels in order to meet predicted demand.
Ride reservations in the period were more than 20% lower than in the previous year’s third quarter, but Uber claimed ride unit profits had reverted to pre-pandemic levels.
“Investors want to see a meaningful recovery in the 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.
(Adapted from BusinessToday.in)