Mixed returns for Uber, EA and Square in latest quarter

6 Nov 2020

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The Covid-19 pandemic has affected major tech players in different ways, as seen with the latest earnings from Uber, EA and Square.

Following the Big Tech earnings bonanza last week, some other major names in US tech have announced their latest financial performances.

One of the most anticipated of these was ride-hailing giant Uber, which recently celebrated the passing of Proposition 22 in California. This means that drivers, couriers and others working in the so-called gig economy can remain as independent contractors and do not have to be reclassified as employees under the state’s newly introduced labour law.

Uber posted revenue of $3.1bn in the third quarter of 2020, lower than the $3.2bn expected by analysts. Over the course of the quarter, the company lost just over $1bn, which was less than the $1.16bn loss it saw in Q3 2019.

The company’s adjusted net revenue for its core ride-hailing service was down 52pc year-on-year to $1.37bn. However, its delivery business – including Uber Eats – saw a 190pc year-on-year jump to $1.14bn.

With changing consumer demand during the Covid-19 pandemic, Uber’s delivery business had become larger than its ride-hailing segment in the previous quarter.

“Despite an uneven pandemic response and broader economic uncertainty, our global scope, diversification and the team’s tireless execution delivered steadily improving results, with total company gross bookings down just 6pc year-on-year in September,” said Dara Khosrowshahi, CEO of Uber.

CNBC reported that Uber’s shares dropped by up to 4pc in after-hours trading, despite seeing a huge surge following the news of Prop 22’s passing earlier in the week.

EA beats expectations, but revenue falls

Elsewhere, Electronic Arts (EA) saw revenue fall to $1.15bn in its latest quarter from the $1.35bn it achieved this time last year. It also reported a net income of $185m, compared with $854m it achieved this time last year.

As VentureBeat reported, one of the reasons for lower EA revenues last quarter is that FIFA 21 isn’t being launched until this quarter.

The company’s ‘live service’ net revenue for the last 12 months – generated through micro transactions and purchasable in-game items – was slightly more than the previous 12 months, at $3.9bn versus $3.36bn. This is more than twice the net revenue made through the sale of base games.

“We are on track to deliver strong growth this year and expect continued growth in fiscal 2022 and in the years to come,” said EA COO and CFO Blake Jorgensen.

“Apex Legends is on track to become our latest billion-dollar franchise by the end of the fiscal year. All of our studios continue to execute amazingly well and have enabled us to launch an industry leading eight games since the beginning of the fiscal year, while continuing to deliver live services content and expand onto new platforms.”

Following its earnings report, EA’s shares in after-hours trading fell by up to 7.6pc.

Square sees strong user growth

A surge in Cash App users has reaped dividends for payments giant Square, which reached revenues of $3.03bn in Q3 versus $1.27bn this time last year. MarketWatch reported that market analysts had predicted revenues of $2.04bn.

$965m was made through the company’s seller business, but its mobile payments platform Cash App generated $2.07bn. Excluding bitcoin payments, revenue for the app came in at $435m, which was 174pc higher than the same quarter in 2019.

Square’s gross profit also surpassed expectations, clocking in at $794m versus the $597m it made this time last year and $708m that analysts predicted.

“While the macroeconomic environment remains uncertain, we continue to believe that our seller and Cash App ecosystems are well positioned to benefit from the acceleration of secular shifts, such as omnichannel commerce, contactless payments and digital wallets for consumers,” the company said. “We intend to invest in the business to drive attractive returns.”

Colm Gorey was a senior journalist with Silicon Republic