Costco Wholesale : Uber posts $509 mln adjusted loss on driver incentives even as trips rise
Aug 4 (Reuters) – Uber Technologies Inc on
Wednesday reported widening losses as it spent more to entice
drivers to return to its platform, sending shares of the
ride-hail and food delivery company down in after-hours trade.
Investors sold the shares despite Uber management’s
assurances that the company can deliver a sharp turnaround in
profitability even as New York and other major cities reimpose
some pandemic restrictions.
Uber posted an adjusted $509 million second-quarter loss
before interest, taxes, depreciation and amortization – a metric
that excludes one-time costs, including stock-based compensation
– widening losses by nearly $150 million from the first quarter.
Analysts on average had expected the company to report an
adjusted EBITDA loss of around $324.5 million, Refinitiv data
Shares were down 5% in after-hours trading after closing the
regular session down 2.2%.
The company also warned investors that uncertainty from the
Delta variant of the coronavirus continues to impact visibility
But Uber Chief Executive Dara Khosrowshahi told analysts on
a conference call that the company’s food delivery business
provided a hedge against potential ride-hail declines and that
July trends support the company’s confidence for the second half
of the year.
Gross bookings during the second quarter reached an all-time
high of nearly $22 billion, with more passengers returning for
trips while food delivery orders also increased.
Nevertheless, the earnings call was dominated by questions
over driver supply and the ongoing impact of the pandemic.
Investors are worried about the ongoing shortage of drivers
in the industry as demand ramps up. Uber’s smaller rival, Lyft,
on Tuesday said it expected limited driver supply to continue in
the next quarter, requiring further investments in driver
Uber said riders returned to its platform in greater numbers
in July and it expects the trend to continue in the coming
months, together with strong food delivery orders.
Uber reaffirmed its goal of hitting profitability on an
adjusted EBITDA basis at the end of this year and said it would
reduce losses to $100 million in the third quarter.
That assumes the more contagious Delta variant does not
reverse a gradual reopening of the U.S. economy, an issue that
Lyft said on Tuesday it was monitoring.
Uber on Wednesday said monthly active drivers and food
delivery workers had increased by nearly 420,000 from February
to July. Passenger wait times in major U.S. cities also
decreased during that time, the company said.
Uber spent a massive $250 million in driver incentive
investment in the second quarter, which increased losses at its
ride-hail business. Uber said mobility profitability will expand
significantly as U.S. and Canadian driver investments fade, a
trend it has witnessed in Australia and other markets.
U.S. driver supply increased by 30% from June to July, even
as incentives were reduced.
“We invested early and aggressively and are seeing very
positive momentum,” Khosrowshahi said.
The company had urged U.S. drivers to take advantage of the
incentives before pay drops to pre-COVID-19 levels as more
drivers return to the platform.
Total costs and expenses in the second quarter jumped by
over 57% to $5.12 billion year over year.
Uber also took advantage of unrealized gains in its
investments in Chinese ride-hail company Didi Global
and self-driving company Aurora to post second-quarter net
profit of $1.1 billion.
Uber executives said the company might sell some of those
positions after clearing regulatory restrictions if the market
offered reasonable values for them.
Uber’s delivery unit, which includes restaurant delivery
service Uber Eats, narrowed losses on a quarterly basis and more
than doubled gross bookings from last year.
Overall, the company reported second-quarter revenue of $3.9
billion, beating average analyst estimates of $3.75 billion,
according to IBES data from Refinitiv.
Uber doubled down on Uber Eats, which has been a pandemic
winner, by acquiring rival startup Postmates and last-mile
alcohol delivery company Drizly.
Uber is also expanding its grocery delivery business, having
announced partnerships with Albertsons Companies Inc and
Costco Wholesale Corp.
In July, Uber also announced the acquisition of logistics
company Transplace for about $2.25 billion in a boon to its
freight delivery unit, which is now expected to break even on an
adjusted EBITDA basis by the end of 2022.
(Reporting by Tina Bellon in Austin, Texas and Akanksha Rana in
Editing by Peter Henderson and Matthew Lewis)
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