Uber on Thursday reported a $1.8 billion loss in the recently ended quarter as the COVID-19 pandemic caused its shared-ride business revenue to plunge.
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Overall revenues skidded 29 percent from a year ago to $2.2 billion, as gains from delivery failed to offset a massive 75 percent drop in its ride-hailing bookings, San Francisco-based Uber said.
Uber reports losses from pandemic spikes
Uber shares dropped more than four percent in after-market trades that followed release of the earnings figures.
“Our team continues to move at Uber speed to respond to the pandemic’s impact on our communities and on our business,” chief executive Dara Khosrowshahi said.
Khosrowshahi said Uber’s diversified business model offered “a natural hedge” against the crisis because “more people are ordering from Uber Eats than ever before.”
Uber’s global ride-hailing operations were hit hard during the coronavirus lockdowns, with bookings down 75 percent and revenue declining 67 percent in the second quarter.
The delivery operations under Uber Eats meanwhile saw revenues more than double to $1.2 billion — and overtake rideshare revenue in the three months ending in June.
Uber has made changes in recent months, sealing a deal for Postmates delivery service in the US while divesting its Jump scooter and bike-sharing unit.
It has also quit some markets including Austria, Czech Republic, Egypt, Honduras, India, Saudi Arabia, South Korea, Peru, Romania, United Arab Emirates, Ukraine, and Uruguay.
Uber said the company sees a recovery from the crisis that will allow it move into profitability.
“We have been desperately looking for trends to identify ways in which the future will be different from the past, and quite frankly we haven’t come up with any,” Khosrowshahi told analysts on an earnings call.
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“We haven’t seen any signs there will be any permanent damage to the business; on the contrary, we have seen signs that where economies have opened up business has bounced right back.”
Uber and Lyft in violation of state law in California
Meanwhile, California has filed lawsuits against Uber and Lyft for alleged wage theft by misclassifying drivers as independent contractors rather than employees, in violation of a recently enacted state law.
Khosrowshahi said Uber hopes to resolve the California crisis with a voter proposition to replace the law with a plan that keeps driver independence with some modifications.
The proposition provides a “better way” to classify drivers in a smartphone app age, according to Khosrowshahi.
“We think we’ve got a great message,” Khosrowshahi said.
“We’ve got terrific supporters in the community who actually care about drivers versus, you know, labor unions and politics.”
DoorDash, a food delivery platform, is also being sued by San Francisco for illegally classifying workers as contractors.
Uber, Lyft and DoorDash are backing the ballot initiative in November’s election which would classify rideshare drivers and other gig-economy workers as independent contractors, while offering certain benefits such as minimum wage, sick leave and workers’ compensation.
Flourishing Uber Eats counters losses
Uber has been working to offset the collapse of its core taxi business due to the pandemic by increasing its food delivery operations.
Last month, it launched a feature that allows users in some cities in the US, Canada, Brazil, Chile, Colombia and Peru to order groceries through its app. The move comes after the firm took a majority stake in Chilean start-up Cornershop last year.
It also announced a deal in July to buy US restaurant delivery start-up Postmates for $2.65bn – a move that could give it control of an estimated 30% of the American market.
Uber said Uber Eats revenue doubled to $1.2bn in the quarter, as people worried about coronavirus continued to order in rather than eat out.
Uber Eats is now bigger than the company’s original ride-hailing division — but growth in the food delivery business was unable to counteract a 75% drop in global ride-sharing, dragging the overall revenues down 29% https://t.co/QVeUko4sp1
Overall quarterly revenue dropped 29% year-on-year, falling to $2.2bn, as the rides business weighed on results. Revenue Uber collected from trips fell 67% to $790m, while gross bookings – the total dollars from the trips – were down 75% to $3bn.
In cities where the virus is under control, demand has bounced back, Mr Khosrowshahi said.
Uber said its losses had narrowed to about $1.8bn, from $5.2bn a year ago, when its listing on the stock exchange swelled costs.
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The improvement also follows Uber’s announcement in May that it was taking steps to slash costs by $1bn including cutting 6,700 jobs – roughly a quarter of its workforce.
The figures did not include drivers, which the firm considers independent contractors.
That position has drawn multiple lawsuits, including one filed this week by California’s Labor Commissioner.
Mr Khosrowshahi said he thought the firm had a “strong path” to fight those claims or win support among state voters for legislation that would overturn a California law intended to force Uber to change its driver classification.
AFP with additional input by GVS News Desk