Uber Technologies Inc. reported revenue that beat analysts’ expectations, fuelled by a recovery in driver supply that supported increased ridership, assuaging investor concerns that rising inflation would damp consumer spending. The shares jumped about 6% in early trading.
Third-quarter sales jumped 72% to $8.34 billion, the San Francisco-based company said Tuesday in a statement. That exceeded the $8.1 billion analysts were expecting, according to data compiled by Bloomberg. Gross bookings, which encompass ride hailing, food delivery and freight, increased 26% to $29.1 billion, slightly below the average estimate. Adjusted earnings before interest, tax, depreciation and amortisation reached $516 million. Analysts, on average, projected $458.7 million.
Uber’s “global scale and unique platform advantages are working together to drive more profitable growth,” chief executive officer Dara Khosrowshahi said in the statement. “Even as the macroeconomic environment remains uncertain, Uber’s core business is stronger than ever.”
Uber reported its ride-hailing driver base at the end of the period on September 30 was “on par with September 2019 levels,” and the increased driver engagement continued into October. The improvement is a sign the company is moving past a protracted shortage of drivers that has also affected rival Lyft Inc., resulting in higher fares and wait times for customers. Both ride-hailing giants have spent millions to lure drivers back to their respective platforms and recruit new ones to meet resurgent rider demand.
After surging during much of the pandemic, Uber and other gig economy peers such as Lyft and DoorDash Inc. are navigating a challenging economy that includes US inflation rising to a 40-year high while the risks of a global recession loom. The uncertainty has weighed on spending by advertisers and consumers, hitting tech giants like Meta Platforms Inc. and Amazon.com Inc. The gloomy outlook remains a risk for Uber, whose ride-hailing and delivery services carry a premium that customers may view more as a splurge than a necessity as budgets tighten.
Uber’s food-delivery arm, Uber Eats, generated $13.7 billion in gross bookings during the quarter, a decline from the previous period, and missed the $13.9 billion analysts expected. The unit, which offers delivery across restaurants, groceries and alcohol, has grown to make up about 33% of the company’s total revenue. Uber Eats initially benefited from the pandemic-induced boom in delivery and has more than doubled in size, based on bookings, from before Covid-19 emerged. The increased scale has allowed the delivery business to become more profitable, posting a record $181 million in adjusted earnings during the period.
“While the delivery category is one of the few ‘pandemic winners’ that continues to grow with a healthy top line, we welcome the newfound capital discipline amongst our peers,” Khosrowshahi said. “We will be measured with our investments, and will look to expand profitability while maintaining or growing our category position.”
Uber reached profitability on an adjusted basis for the first time in its history last summer and, earlier this year, Khosrowshahi pledged to reach $2 billion in free cash flow. One way the company plans to meet that target is by giving more attention to ads. In October, Uber launched a dedicated advertising arm to monetize its audience of 124 million monthly active users and tap a higher-margin revenue stream. The company said the business reached $350 million in run-rate revenue during the third quarter and affirmed its goal to reach $1 billion in ad sales by 2024.
The company’s freight unit completed an integration with Transplace, which it acquired last year, and reported revenue of $1.75 billion. Bookings and adjusted earnings for the division missed analysts’ estimates amid weaker demand, spot volumes and rates that affected the logistics sector, Uber said.
Uber projected adjusted earnings before interest, tax, depreciation and amortization in the current quarter of $600 million to $630 million, beating estimates of $564.4 million. Gross bookings will be $30 billion to $31 billion in the period ending in December, in line with expectations.
The company recorded a net loss of $1.2 billion, or 61 cents a share, attributed in part to its equity stake in Didi Global Inc.
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