Uber Technologies (NYSE:UBER)
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2 Months : From Jan 2020 to Mar 2020
By Sarah E. Needleman
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (February 27, 2020).
The head of Uber Technologies Inc.'s food-delivery business is leaving the company, a departure that comes as the unit works to exit markets where it isn't a dominant player in a bid to boost profits.
Uber on Tuesday said the departing executive, Jason Droege, will be succeeded at Uber Eats by the head of its international rides business, Pierre-Dimitri Gore-Coty. Mr. Gore-Coty joined the company in 2012.
Uber didn't say why Mr. Droege, who came on board the San Francisco company in 2014 to spearhead new ventures, was leaving. Mr. Droege will be available until June to help with the transition, Uber said. Uber couldn't immediately be reached for additional comment.
Eats has helped Uber boost its revenue, but has weighed on its bottom line. The unit posted an adjusted loss before interest, taxes, depreciation and amortization of $461 million for the three months ended Dec. 31.
To stem such losses, Chief Executive Dara Khosrowshahi has been pulling Eats out of markets where it isn't among the top two food-delivery services. Last month Uber agreed to sell its Indian food-delivery unit to a local rival. Last year the company also discontinued food-delivery operations in Vienna and pulled out of South Korea.
Uber has also been seeking to shore up its finances possibly by merging with a competitor such as DoorDash Inc. or Postmates Inc. So far, though, discussions haven't resulted in any deals.
Mr. Khosrowshahi has said the Uber Eats exits are helping put the company on a faster path to profitability. On an earnings call earlier this month, he said he now sees the company being profitable on an adjusted Ebitda basis by the end of this year. Previously he said the company hoped to reach that mark by the end of 2021.
Uber has said it expects pricing in food delivery, its second-biggest business after ride-hailing, will become more reasonable and the discounts and promotions will begin to fade. The company is already starting to keep more money from each meal-delivery transaction. Adjusted net revenue, which excludes driver incentives and referral bonuses for Eats, was $1.38 billion in 2019, up 82% from a year earlier.
Uber still faces challenges ahead. Its core ride-sharing business is under regulatory scrutiny in some of its most lucrative markets. In California, which accounts for about 9% of Uber's gross bookings, a new law known as AB5 may require the company to reclassify its drivers as employees, which would dramatically raise costs. And in London, which makes up about 5% of its ride bookings, the company was stripped of its license to operate in November, a ruling by local authorities it is appealing.
--Preetika Rana contributed to this article.
Write to Sarah E. Needleman at email@example.com
(END) Dow Jones Newswires
February 27, 2020 02:47 ET (07:47 GMT)
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