Uber’s Revenue Craters, as Deliveries Surge in Pandemic
OAKLAND, Calif. — Uber is synonymous around the globe with experience hailing. But as the coronavirus pandemic reveals few indicators of loosening its grip, the corporate might grow to be extra intently related to one other enterprise: supply.
Uber stated on Thursday that its ride-hailing enterprise had cratered in the second quarter as folks traveled much less in the pandemic. The firm’s income fell 29 % to $2.2 billion from a yr in the past — the steepest decline since its preliminary public providing final May — as its internet loss totaled $1.eight billion.
But its Uber Eats meals supply service surged, with income greater than doubling from a yr in the past to exceed that of experience hailing for the primary time. Revenue for Uber Eats soared to $1.2 billion, whereas rides got here in at $790 million.
Dara Khosrowshahi, Uber’s chief govt, stated in a name with traders on Thursday that the numerous pandemic responses around the globe had created “a tale of 10,000 cities” for the corporate, with enterprise recovering in some areas and never in others.
In spite of the challenges, he stated supply was “a very high-potential opportunity” for Uber to broaden even additional by providing deliveries of house items, prescription medicines and pet provides.
Uber has doubled down on meals supply in latest months. In May, Mr. Khosrowshahi sought to acquire Grubhub, a delivery service, but the companies struggled to agree on terms and to deal with potential antitrust scrutiny. Last month, Uber said it would instead acquire the delivery service Postmates in an all-stock deal valued at $2.65 billion.
Buying Postmates is expected to give Uber roughly 35 percent of the U.S. food delivery market, analysts said. That would allow Uber to challenge the delivery leader, DoorDash, which is estimated to have a 45 percent market share. The mixed results sent Uber’s share price down more than 2 percent in after-hours trading.
“Right now, they are swimming in the red ink,” said Dan Ives, managing director of equity research at Wedbush Securities. “Investors are still giving them the benefit of the doubt because of Uber Eats.”
Uber has consistently lost money, and Mr. Khosrowshahi remains under pressure to make it profitable. The company’s net loss in the second quarter narrowed from $5.2 billion a year ago, when it was dealing with stock-based compensation costs from its initial public offering. Uber said it still intended to become profitable sometime next year.
The company also said there were some signs that its rides business was improving internationally. In France, business had recovered about 70 percent, it said, while rides to work and to social gatherings in places such as Hong Kong, New Zealand and Sweden were higher than they had been before the pandemic.
But in the United States, which is one of Uber’s largest markets, rides were down 50 percent to 85 percent in many major cities.
Uber also faces legal challenges in California and Massachusetts, where the state attorneys general have sued Uber and Lyft for violating labor law. Drivers in both states should be classified as employees, not independent contractors, and be entitled to full employment benefits, the states have said.
If the lawsuits are successful, they could diminish Uber’s business because it would make it more expensive to operate, analysts said.
“It will be hard to argue that Uber and Lyft are the future of transportation,” said Tom White, an analyst for D.A. Davidson. “These guys will look a lot more like tech-centric, tech-smart taxi operators.”
Most drivers prefer to remain independent contractors, Mr. Khosrowshahi said. “We are confident in our position,” he said.
