Uber Technologies Inc. reported better-than-expected net income, boosted by record ridership volumes, offering evidence the ride-hailing giant is officially moving beyond its cash-burning startup past and making progress on its profitability goals.
(Bloomberg) — Uber Technologies Inc. reported better-than-expected net income, boosted by record ridership volumes, offering evidence the ride-hailing giant is officially moving beyond its cash-burning startup past and making progress on its profitability goals.
The company generated net income of $394 million in the second quarter, far surpassing the loss of $49.2 million analysts were expecting, thanks in large part to unrealized gains in equity investments. The company also generated its first-ever operating profit according to generally accepted accounting principles, of $326 million, and recorded free-cash-flow of $1.14 billion. The shares rose about 3.7% in premarket trading in New York.
“Both of these milestones were achieved through a combination of disciplined execution, record audience, and strong engagement,” Chief Executive Officer Dara Khosrowshahi said in prepared remarks. He added that the company was “well-positioned to sustain strong, incremental profit generation.”
Uber projected gross bookings of $34 billion to $35 billion in the current quarter and adjusted earnings before interest, tax, depreciation and amortization of $975 million to $1 billion, both beating analysts’ forecasts.
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 Q2 results, that transformation has occurred. I am very proud of the great work we have all accomplished and thank Dara for his partnership.”
Chai’s pending departure comes as Uber is maturing into a broader and more stable company. 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. After struggling with a driver shortage that caused fares and wait times to increase, Uber has managed to get its driver supply above pre-pandemic levels — it was up 33% in the second quarter compared with last year. Uber has focused on adding new features and products to the app including a teen rides program, the ability to book group and guest rides, video gift messaging and a boat service.
The number of trips, which jumped 26% in the quarter, gross bookings and active drivers in the mobility unit all hit record highs, the company said.
San Francisco-based Uber shares have doubled in the last year, a stark divergence in performance 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.
When the pandemic crushed demand for rides, Uber’s decision to focus on Uber Eats helped it gain a foothold in the meal delivery sector which has continued to grow, even as indoor dining has resumed. Uber Eats generated $3.06 billion in revenue, slightly below Wall Street’s estimates, but better-than-expected adjusted Ebitda of $329 million as the unit benefitted from advertising. Customers seem to have been undeterred by higher prices for food, with delivery frequency at an all-time high of four monthly orders per eater, up 8% from a year earlier.
Total revenue jumped 14% to $9.2 billion during the period, the company said in a statement Tuesday. That narrowly missed the $9.3 billion analysts were expecting, according to data compiled by Bloomberg.
Uber generated $33.6 billion in gross bookings, which include ride hailing, food delivery and freight. That was up 16% from a year earlier and beat the $33.5 billion Wall Street had forecast.
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.