Taking a hit: A Uber delivery worker waits outside a restaurant in New York. Riders have flocked to Uber in record numbers and demand for food delivery is strong, but overall revenue has been weighed down by losses in the freight unit. — AFP
NEW YORK: Uber Technologies Inc reported its first-ever operating profit, but that milestone was eclipsed by a pace of growth that has decelerated from pandemic highs, sending the shares down the most in nine months.
Uber posted a second-quarter operating profit according to generally accepted accounting principles of US$326mil (RM1.47bil).
Total revenue jumped 14% to US$9.2bil (RM41.65bil) during the period, the slowest growth rate since the first quarter of 2021.
Riders flocked to Uber in record numbers and demand for food delivery was strong, but overall revenue was weighed down by losses in the freight unit.
The shares, which had doubled this year, dropped as much as 7% to US$46 (RM209.14), the biggest decline since October.
“The market doesn’t believe Uber can keep top-line growth at these levels,” said Bloomberg Intelligence analyst Mandeep Singh.
The results have raised the bar for Uber going forward.
Uber’s business has remained largely unscathed from elevated inflation rates as customers are still willing to pay a premium for the convenience of hailing a ride and getting food delivered to their door.
Trips in the United States and Canada have recovered to pre-pandemic levels, while delivery frequency hit an all-time high, despite increased costs for food.
After struggling with a driver shortage that caused fares and wait times to increase, Uber said the number of active drivers were up 33% in the second quarter compared with last year. The number of trips taken increased 26% from a year earlier.
Uber has focused on adding new features and products to the app, including a teen rides programme, the ability to book group and guest rides, video gift messaging and a boat service.
Chief executive officer Dara Khosrowshahi said the company is developing an artificial intelligence-powered chatbot to integrate into its app, joining the long list of companies that are turning to the language tool to improve customer service, marketing and other automated tasks.
The company has also expanded advertising on the app and said it has been disciplined in cost management “across the board.”
Uber has avoided the widespread layoffs that have afflicted many other tech companies in recent months, though it has made limited cuts in its freight unit and in human resources.
The company was forced to undertake a major downsizing in 2020, when it dismissed about a quarter of its workforce at the height of the pandemic.
The operating profit, the company’s first since its founding in 2009, helped push Uber to a surprising gain in net income in the quarter.
Uber has previously reported a quarterly net profit on occasion but it has always been fueled largely from investment gains, as it was again in the second quarter.
In the three months ended June 30, Uber generated a net income of US$394mil (RM1.78bil), far surpassing the loss of US$49.2mil (RM222.75mil) analysts were expecting.
Uber projected gross bookings of US$34bil (RM153.94bil) to US$35bil (RM158.46bil) in the current quarter and adjusted earnings before interest, tax, depreciation and amortisation of US$975mil (RM4.41bil) to US$1bil (RM4.53bil), both beating analyst forecasts.
“These milestones were achieved through a combination of disciplined execution, record audience, and strong engagement,” Khosrowshahi said in prepared remarks.
He added that the company was “well-positioned to sustain strong, incremental profit generation.”
The company also announced that chief financial officer Nelson Chai is stepping down effective Jan 5, marking one of the most high-profile departures since the company went public in 2019. A search for his replacement is underway.
“When I joined the company in 2018, Dara asked me to lead the financial transformation of the company,” Chai said in a statement.
“As you can see from our second-quarter results, that transformation has occurred. I am very proud of the great work we have all accomplished and thank Dara for his partnership.”
San Francisco-based Uber shares have diverged sharply from Lyft Inc, which has struggled to fully recover from the effects of Covid-19. Unlike Uber, Lyft only operates in North America and doesn’t have a food-delivery unit.
Earlier this year, Uber’s crosstown rival installed a new chief executive officer and lowered prices to stem market share losses to Uber.
Uber accounted for 74% of the US consumer ride-share sales at the end of June, while Lyft had 26%, according to Bloomberg Second Measure.
Lyft shares slid 4.4% after Uber’s results. The company is scheduled to report results next week.
In a conference call with analysts, Khosrowshahi said that Uber’s fares during the quarter were “comparable” to Lyft’s. — Bloomberg
