Uber Ridership Fails to Recover as Pandemic Drives Another Big Loss -- Update
August 06 2020 - 6:54PM
Dow Jones News
By Preetika Rana
Uber Technologies Inc. posted another big loss with little sign
of recovery in its core ride-hailing business as the coronavirus
pandemic drags on.
Gross bookings for Uber's rides declined 75% year-over-year in
the three months ended June 30, the San Francisco-based company
said Thursday. With the entire second quarter affected by the
Covid-19 outbreak, bookings fell 72% from the first quarter when
the pandemic first struck.
Uber Chief Executive Dara Khosrowshahi on Thursday said business
in Asia was bouncing back, with ride bookings in Hong Kong and New
Zealand, where the pandemic has eased, "at times exceeding
pre-Covid highs." While ridership is picking up in some lucrative
cities including New York, where bookings more than doubled
year-over-year, Mr. Khosrowshahi said bookings were down as much as
85% in some U.S. locations.
In May, he said there were early signs of recovery in ridership
as some jurisdictions eased shelter-in-place measures, but the
recovery stalled as Covid-19 infection numbers rose.
Uber's food-delivery business has been a bright spot during the
pandemic, with people stuck at home. Bookings more than doubled
year-over-year and advanced 49% over the first quarter.
"If restrictions continue or need to be reimposed, our delivery
business will compensate," Mr. Khosrowshahi told analysts on an
earnings call Thursday.
Mr. Khosrowshahi had vowed to make Uber profitable on an
adjusted earnings before interest, taxes, depreciation and
amortization basis before the end of the year. He withdrew that
forecast in April, however, because of the health crisis. On
Thursday, the company reaffirmed its hope to reach that milestone
next year. Uber introduced a host of measures in May to save more
than $1 billion in fixed costs, including far-reaching job cuts.
The company booked $382 million in restructuring costs in the
second quarter linked to its efforts to become leaner.
That charge contributed to Uber's $1.8 billion net loss, far
smaller than the year ago period when one-time costs from its
initial public offering drove its largest-ever three-month loss.
Stripping out one-time costs, its second-quarter adjusted Ebitda
loss widened to $837 million compared with a $656 million adjusted
loss in the year-ago period.
Uber shares fell more than 3% in after-hours trading.
Total quarterly revenue fell 29% to $2.24 billion from $3.17
billion in the year-ago period. Overall gross bookings, including
Uber's food-delivery business and other operations, declined 35%
year-over-year to $10.22 billion. The results were broadly in line
with Wall Street's already muted expectations. Analysts surveyed by
FactSet had forecast revenue at $2.08 billion and gross bookings at
$10.53 billion.
The rides segment, despite plummeting ridership, remained
profitable on an adjusted basis, signaling the company's decision
before the pandemic to focus on profitable growth after years of
losses is showing results.
The Eats segment lost $232 million in the quarter on an adjusted
basis in the cutthroat food-delivery market where profit has
largely been elusive. Uber has tried to trim those losses, and the
second-quarter results were the best three-month performance for
its Eats business.
Last month, Uber agreed to acquire rival Postmates Inc. in a
tie-up that would allow the company to find savings amid the costly
work of building out a delivery empire and to compete with
deep-pocketed rivals. The $2.65 billion all-stock deal is expected
to close next year. Uber was vying to buy Grubhub Inc., but was
beat out by Dutch food-delivery giant Just Eat Takeaway.com NV in a
$7 billion deal.
Falling ridership during the pandemic and fierce competition in
its food-delivery business aren't Uber's only headaches. Regulators
also have Uber and other so-called gig-economy companies in their
crosshairs for allegedly misclassifying their workers as
independent contractors instead of employees.
On Wednesday, California's Labor Commission said it was suing
Uber and rival Lyft Inc. for misclassifying their drivers in that
way. The state's new gig-economy law, which took effect Jan. 1,
seeks to force the companies to classify drivers as employees,
making them eligible for benefits such as paid sick leave and
health insurance -- issues that became front-and-center during the
pandemic.
Uber and Lyft have said their drivers are properly classified
under the law. Still, the ride-hailing companies have joined other
startups that rely on gig workers and raised more than $110 million
to back a ballot initiative for November, asking that voters exempt
them from the law.
Uber and other companies, under the proposal, would guarantee
health-care subsidies and other benefits to drivers who work over a
certain number of hours a week. Mr. Khosrowshahi said on Thursday's
call that the most Uber drivers don't want to become employees.
Write to Preetika Rana at preetika.rana@wsj.com
(END) Dow Jones Newswires
August 06, 2020 18:39 ET (22:39 GMT)
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