Uber riders recover from pandemic lows

Uber Technologies From Inc.

Passenger numbers rebounded strongly in the fourth quarter from last year’s pandemic lows, but continued driver shortages and uncertainty about how the Delta variant will affect consumer behavior pushed its shares lower.

The company said Wednesday that its adjusted loss before taxes, interest and some costs dropped to $ 509 million in the second quarter from $ 837 million in the same period a year earlier. Analysts surveyed by FactSet expected a pre-game adjusted loss of $ 322 million. Uber spent money in the quarter on incentives to attract drivers amid a shortage that has raised riders’ fares. Its shares fell more than 5% in after-hours trading.

Lyft rival Inc.

on Tuesday it made its first quarterly profit on that basis. The company reached that milestone a quarter earlier than expected, in part because passenger numbers recovered and costs controlled.

Uber’s travel business is profitable by that measure, but its bottom line is affected by its capital-intensive food delivery business. The company said it expects its loss under that measure to be reduced to less than $ 100 million in the current quarter, and that it remains on track to post a profit under that measure for the fourth quarter.

Uber is among the companies that were hit by the pandemic, as cities were blocked and passenger numbers plummeted, and it benefited from people trapped in their homes turning to food delivery in record numbers. The relaxation of pandemic restrictions boosted Uber’s travel business in the second quarter, but rising Covid-19 infections could affect prospects for the near future.

Chief Executive Officer Dara Khosrowshahi said the company’s travel bookings increased in July from the previous month, but cautioned that “no one can predict what will happen to Delta in the future.”

Uber benefited from people staying home during the pandemic turning into record numbers for food delivery.

Photo:

Akio Kon / Bloomberg News

The San Francisco-based company posted record bookings in the second quarter. The company’s reserves grew 114% year-over-year to $ 21.9 billion in the three months ended June. Bookings for Uber Eats, its food delivery division, grew 85%, while the private transportation business more than doubled from last year’s lows.

The company expects to break its record for bookings in the current quarter. He said he expected third-quarter reserves between $ 22 billion and $ 24 billion, in line with the average analyst estimate of $ 23 billion.

Reservations allow the company and investors to measure consumer demand, as they represent the total value of the trips or food booked on the Uber platform. The company earns revenue by cutting reserves. Second quarter revenue more than doubled.

The company posted a rare net profit of $ 1.1 billion thanks to earnings from its investments in Didi Global. Inc.

I DID -3.57%

and Aurora Innovation Inc. But Didi’s ongoing issues with regulators in China may negatively affect Uber’s net revenue in the third quarter.

A short-term challenge for Uber and Lyft is to lure drivers back to their platforms and contain skyrocketing passenger fares. Lyft said third-quarter revenue would be affected by its spending on driver incentives, which it expects will alleviate continued shortages and lower rates in the near term. Its shares fell more than 10% on Wednesday with that guidance.

Uber said it did not plan to spend much more on incentives in the third quarter. He told analysts Wednesday that new driver onboarding in the US in July was up 30% from the previous month, even as he withdrew some incentives. Lyft said 50% more drivers had returned to the platform in the second quarter over the first quarter.

As part of its path to profitability, Uber cut staff and got rid of side businesses. It has also looked for ways to strengthen its burgeoning delivery business, which became a lifesaver during the health crisis. More recently, it has expanded to deliver everything from groceries and flowers to medicine.

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Uber said in February it was buying the Drizly alcohol delivery service for $ 1.1 billion in stock and cash to expand beyond food delivery. That came after last year’s $ 2.65 billion deal for smaller food delivery rival Postmates Inc.

Last month, the company also said it was investing in its growing logistics operations with the $ 2.25 billion acquisition of technology-focused service provider Transplace in a cash-and-stock deal.

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