Uber Swings to Loss Despite Rising Revenue
Uber Technologies swung to a loss last quarter as legal settlements and equity investments weighed on its results even as demand for its rides and deliveries rose.
The loss was a surprise for analysts, who had predicted another profit for the quarter. Uber recorded its first full-year profit as a public company last year. Chief Executive Dara Khosrowshahi has been cutting costs and slashing hundreds of corporate jobs and gig driver bonuses in an attempt to win over Wall Street.
Uber shares fell 5.5% in morning trading after the company’s results were announced Wednesday. As of Tuesday’s close, the shares had climbed 87% in the previous 12 months, fueled by optimism that it was entering a new phase of steady profits.
Uber posted a $654 million loss in the three months through March. Analysts surveyed by FactSet had expected a profit of $474 million. The company reported a profit in each of the preceding three quarters.
The recent loss included a $721 million charge tied to its equity investments in other companies. The company made money from its operations, but that income was below analysts’ expectations as it had to spend money to settle court cases, including a class-action suit brought by taxi drivers in Australia.
Uber said its bottom line would continue to be affected by its equity investments, though it expects its underlying operations to generate money. The company pointed to its free cash flow and adjusted earnings before some expenses as indicators that it was still on the path of predictable profitability.
The company’s bookings, or the value of transactions on its app, grew 20% to $37.65 billion in the quarter. Cooling demand for rides in Latin America meant the company’s bookings and trips grew below analysts’ expectations. Uber’s revenue, or its cut from those transactions, rose 15% to $10.13 billion.
Smaller rival Lyft’s first-quarter results beat expectations across the board Tuesday.
While Uber’s ride bookings were weaker than expected, its Uber Eats delivery bookings were slightly higher than analysts’ expectations. The habit of getting meals delivered has stuck with consumers after the pandemic, though Uber and its delivery rivals are looking for ways to keep growth up.
On Tuesday, Uber announced a partnership in which Instacart customers can order Uber Eats restaurant food via the Instacart app.
Regulatory challenges loom for Uber’s rides business. Uber and Lyft have threatened to leave Minneapolis over a new minimum-wage rule for drivers. Earlier this week, the companies threatened to quit Minnesota entirely if a compromise wasn’t reached with the state. Separately, driver-reclassification disputes are resurfacing in Massachusetts and California.
This year, New York City and Seattle instituted new minimum-wage laws for food-delivery couriers. Uber Eats and others responded by raising fees for delivery consumers. DoorDash’s orders declined less than 1% because of those changes, the company said while announcing first-quarter results last week.
Uber projected adjusted earnings in the current quarter to be between $1.45 billion and $1.53 billion. Analysts were expecting $1.49 billion. It projected bookings in the current quarter to be between $38.75 billion and $40.25 billion. Analysts were expecting $40 billion.
Write to Preetika Rana at [email protected]