Appetite for Uber Eats fails to offset ride-sharing collapse – Financial Times

A surge in Uber’s food delivery business was unable to counteract a 75 per cent drop in global ride-sharing, dragging the company’s overall revenues down 29 per cent as it counts the cost of the coronavirus crisis.

For the April-June quarter, Uber’s gross bookings — the total value of trips, deliveries and other Uber services — fell 35 per cent from the same period last year, to $10.2bn.

The number of active users of Uber’s services fell by 44 per cent to 55m.

But locked-down Uber customers pushed revenue for the company’s food delivery business, Uber Eats, up by 103 per cent year-on-year to $1.2bn — the first time food delivery has driven more revenue for Uber than ride-sharing.

Speaking to investors on Thursday, Uber chief executive Dara Khosrowshahi said the delivery business had shifted from being a “luxury to a utility”, and was now as big as the ride-share business was when he took over the company in 2017.

“We essentially built a second Uber in under three years,” he said.

The impact on its ride-sharing business was in line with warnings given by the company last month. Despite the drop, the business was still profitable in the quarter, before interest, tax, depreciation and amortisation costs.

The company declined to give full guidance on what it expected from the current quarter, describing it as a “tale of 10,000 cities”.

“Our mobility recovery is clearly dependent on the public health situation in any given area,” Mr Khosrowshahi said, adding that Asia, excluding India, was leading the improvement.

In New Zealand and Hong Kong, gross bookings had at times exceeded pre-Covid levels. Across the entire company, there were signs of a steady recovery: gross bookings in July were down 12 per cent year-on-year, a shallower decline than in the preceding few months.

The US, however, was lagging, Mr Khosrowshahi said. Gross bookings were still down as much as 85 per cent in the worst hit cities.

Uber maintained its goal for the company overall to post an ebitda positive quarter at some point in 2021.

“We are fortunate to have both a global footprint and such a natural hedge across our two core segments,” Mr Khosrowshahi said. “As some people stay closer to home, more people are ordering from Uber Eats than ever before.”

Uber is expanding its delivery business: it agreed last month to acquire rival delivery service Postmates in an all-stock deal worth $2.65bn.

Group-wide second-quarter revenues were ahead of Wall Street expectations, although the shares lost ground in after-hours trading, falling about 3 per cent to erase some of their gain from earlier in the day.

Second-quarter net losses totalled $1.8bn, 66 per cent less than in the same quarter last year, though that period contained large stock-based expenses relating to the company’s initial public offering.

Excluding the stock-related payouts, Uber’s comparable losses widened by just over 20 per cent.

Measures related specifically to Covid-19, such as payments for some affected drivers, totalled $48m in the quarter, Uber said.

Mr Khosrowshahi said changes Uber had made to its app in an effort to appease California regulators had hurt its position in the market, as driver acceptance rates — the percentage of trips drivers agree to pick up — had gone down in the state.

The company is awaiting the ruling of a California judge on whether to issue a preliminary injunction that would force the company and rival Lyft to provide some employment benefits to workers.

At a hearing on Thursday, Judge Ethan Schulman said he would make his ruling in “days rather than weeks”, but said he was concerned the effect on drivers might be too dramatic to justify the action.

“I feel like I’m being asked to jump into a body of water without knowing how deep it is, how cold it is, and what’s going to happen when I get in,” he said.

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