Uber Expands Food Delivery Further and Sees Ride Demand Pick Up
On Wednesday, Uber Technologies Inc said revenue at its ride-hail and delivery businesses increased on a quarterly basis and said it was well on track to reach its goal of achieving an adjusted profit by year-end.
Shares fell 3% in after-hours trading after gaining around 6% during the day in reaction to smaller ride-hail rival Lyft Inc saying on Tuesday it might become profitable during the third quarter, three months ahead of a previous goal.
Uber reported a loss on an adjusted basis before interest, taxes, depreciation, and amortization of $454 million, significantly narrower than analysts’ average expectations for a $514 million loss, according to Refinitiv data.
The narrower-than-expected adjusted EBITDA loss was helped by significant cost cuts the company instituted throughout 2020, including reducing staff by nearly 30% from the beginning of the year. A focus on its core rides and food delivery business and divestments of ancillary units will allow Uber to emerge from the pandemic a slimmer company.
Adjusted EBITDA, which excludes the cost of the company’s extensive stock-based compensation and other potentially significant items, is the profitability metric Uber uses.
Uber reported $3.17 billion in total revenue in the months from October through December.
Fourth-quarter mobility revenue, largely comprised of rides, declined by 52% from last year, but at $1.47 billion, was up 8% on a quarterly basis despite new lockdown measures in the United States, Europe, and the Middle East.
Lyft on Tuesday said it expected a rebound in demand in the second quarter and, in combination with further cost cuts, said it might now be able to turn a profit in the third quarter.
Orders at Uber’s food delivery platform, Uber Eats, further grew during the fourth quarter, as many countries and U.S. states issued new lockdown orders, closing restaurants and prompting many people to order in.
Delivery revenue more than tripled from last year and at around $1.36 billion, grew 19% compared with the third quarter.
Uber has expanded its footprint in the competitive space and acquired smaller food-delivery rival Postmates for $2.65 billion and alcoholic beverage delivery service Drizly for $1.1 billion.
Both deals were largely stock-based, with the Drizly deal expected to close later this year.
Uber also said it had further lowered costs in the fourth quarter, with total costs and expenses dropping 14% in that period.
Following a directive by Chief Executive Dara Khosrowshahi to focus on the company’s core businesses, Uber has sold two cash-burning units.
In December, the company sold its self-driving Advanced Technologies Group (ATG) in a $4 billion equity deal at a steep drop in valuation. Khosrowshahi at the time said the deal would accelerate Uber’s profitability goal.
The same month, Uber also handed over the keys to its air taxi business Elevate, without disclosing the terms of the deal.
(Reporting by Tina Bellon in New York and Akanksha Rana in Bangalore; Editing by Peter Henderson and Matthew Lewis)
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