Uber's First Quarter Shows Food Delivery's Continuing Strength -- 2nd Update
By Preetika Rana
Uber Technologies Inc.'s first-quarter bookings rose despite
weak demand for its ride-sharing service, as sustained growth in
its food-delivery business offset the slump in its core
Uber's bookings grew 24% year-over-year to $19.5 billion in the
three months ended March, of which $12.5 billion came from its
food-delivery arm. Uber Eats' bookings more than doubled from a
year earlier, while Uber's ride business declined 38% over the same
period. Bookings are used to gauge consumer demand as they
represent the total value of trips or food booked using Uber's
platform. Uber earns revenue by taking a cut from these
Even though Uber's total bookings grew and beat analysts'
forecasts, its overall revenue declined because of an adjustment
tied tnew driver benefits in the U.K. The company reported revenue
at $2.9 billion after setting aside $600 million tied to the U.K.
changes. That compares with revenue of $3.2 billion in the same
period last year.
In March -- after losing a monthslong legal battle -- Uber
granted its U.K. drivers an employment status entitling them to
vacation pay and pension contributions. While Uber won a major
reclassification dispute in its home state of California late last
year, regulatory challenges are far from over.
The Biden administration said earlier Wednesday it would block a
Trump-era proposal that sought to make it easier for Uber and
others to continue classifying gig workers as independent
contractors. The move maintains the status quo, meaning Uber
doesn't need to change its labor model. But the current
administration's stance may add to regulatory snares down the
Despite the U.K. changes, the company reported a narrower net
loss as it benefited from the recent sale of its self-driving unit.
Uber reported a net loss of $108 million, compared with a loss of
$2.9 billion in the year-earlier period.
The San Francisco-based ride-hailing company also narrowed its
adjusted loss before interest, taxes, depreciation and
amortization, beating Wall Street's projections. Uber reported an
adjusted Ebitda loss of $359 million, compared with a loss by that
measure of $612 million in the same year-ago period. Analysts
surveyed by FactSet had expected an adjusted Ebitda loss of $452
Investors are closely watching this number because Uber has said
it expects to be profitable by this measure before the year ends.
Silicon Valley startups often point to an adjusted metric that
strips the business of certain costs so they can show investors a
path to profitable growth.
On a conference call with analysts Wednesday, Uber executives
said they expected the ride-hailing business to bounce back as
vaccinations pick up in the coming months. But the company
acknowledged it faced an imminent challenge: not enough
Chief Executive Dara Khosrowshahi said some drivers are still
hesitant to ferry passengers over food. In addition to distributing
free personal protective equipment, Uber is offering incentives for
drivers to return, Mr. Khosrowshahi said. Rival Lyft Inc., which
reported a 36% year-over-year decline in first-quarter revenue
Tuesday, is also handing out similar incentives. Lyft beat
analysts' revenue forecasts.
As a vaccinated public begins traveling and going to restaurants
again, Uber cautioned that it had limited visibility into how its
delivery business would fare in the coming months. "Year-over-year
comparisons become tougher," Chief Financial Officer Nelson Chai
said, as the company faces "forecasting uncertainty in predicting
post-reopening consumer behavior."
To position itself for continued growth in a post-pandemic
world, Uber last week intertwined its ride-hailing app with its
delivery business so it could drive up Eats orders as more people
took trips. One feature enables passengers to book and pick up
meals while en route somewhere in an Uber. The company began
pinging passengers requesting trips from airports, asking whether
they would like food delivered through the Eats app wherever they
Even before last week's changes, the ride app drove more
first-time users to Eats than all of its paid channels combined,
Mr. Khosrowshahi told analysts. "Looking ahead, I'm confident that
Uber will benefit from the complementary nature of our two large
core opportunities," he said.
Write to Preetika Rana at email@example.com
(END) Dow Jones Newswires
May 05, 2021 19:13 ET (23:13 GMT)
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