Uber's downhill career is slowing
Uber Technologies says quarterly bookings from ride-hailing customers declined for the first time ever due to the effects of the coronavirus - but that the business is already beginning to recover.
The San Francisco-based company has never turned an adjusted quarterly profit and is unlikely to do so this year. Uber now expects to hit that milestone next year, thanks to cost cutting that will eliminate more than $1bn (R18.3bn) in expenses, CEO Dara Khosrowshahi said on a call with analysts.
The ride-hailing business was down about 80% in April, but Khosrowshahi said sales have increased for each of the past three weeks and are on track to do so again this week.
"We believe the US is off the bottom," he said.
Uber is a major investor in Didi Chuxing, the largest ride-hailing operator in China, where the virus originated. By April, Uber withdrew its financial forecast for the year and said it would take a significant charge on investments, which totalled $2.1bn. That drove a quarterly net loss of $2.94bn, nearly triple the loss a year ago.
However, Uber inched closer in the first quarter to its goal of generating an adjusted profit. The loss, excluding taxes, interest and other expenses, declined 30% from a year ago, to $612m.
Another bright spot was food delivery, which helped offset the drop in rides. Homebound customers drove a 52% increase in food-delivery gross bookings to $4.68bn in the first quarter. Gross bookings from rides, a measure of the total value of fares that is closely watched by investors, dropped 5% to $10.9bn. A year earlier, growth was more than 20%.
During the past week, Uber has embarked on a blitz of cost-trimming moves. It said it will end food-delivery operations in more than a half-dozen countries, and its Middle East unit Careem will terminate 31% of employees.
Uber said it will transfer its bicycle and scooter business to another company, Lime, and invest more capital in the start-up.
To achieve the company's revised profit plan, all departments will need to make reductions, Nelson Chai, the chief financial officer, said on the conference call.
Even as Uber is hustling to cut costs and prepares to enforce a new policy requiring some drivers and passengers to wear face masks, a new threat has emerged. Its home state, California, sued Uber and its peer, Lyft, this week, alleging that they are violating a law enabling their drivers to reap employee benefits. If they lose the case, the companies face substantial new costs that will alter their business models there.