Uber’s earnings show soaring demand for delivery

7 Aug 2020

Image: © MoiraM/Stock.adobe.com

With changing consumer demand during the Covid-19 pandemic, Uber’s delivery business is now larger than ride-hailing.

On Thursday (6 August), Uber published its results for the second fiscal quarter of 2020, highlighting declines in its ride-hailing business but significant growth in its food delivery services.

Uber’s revenue overall beat analysts’ expectations to reach $2.24bn, but it was still down 29pc on the same period last year.

‘The Covid-19 crisis has moved delivery from a luxury to a utility’

The company said that Uber Eats bookings were up by 113pc as a result the pandemic, while travel and social restrictions led to a 73pc drop in bookings for Uber’s rides business in the latest quarter. It achieved $3.05bn in gross ride bookings and $6.96bn in gross Uber Eats bookings.

Despite the company’s delivery growth, it was not enough to offset the decline in its core business and Uber’s net loss for Q2 was $1.78bn. However, this was an improvement on the year-ago net loss of $5.24bn, which occurred as the company went public.

Increased demand for delivery

In a statement, Uber CEO Dara Khosrowshahi said: “We are fortunate to have both a global footprint and such a natural hedge across our two core segments: as some people stay closer to home, more people are ordering from Uber Eats than ever before.”

The latest results reveal that Uber Eats was a larger part of the business in Q2 than the company’s core ride-hailing service. Delivery generated $885m in adjusted net revenue, while Uber’s mobility business generated $793m in adjusted net revenue.

In June, the company launched another new delivery service called Uber Connect, which allows customers to send small packages to local destinations through UberX drivers.

Khosrowski said that this service has made 3m trips since its launch this summer. “The Covid-19 crisis has moved delivery from a luxury to a utility,” he added.

Uber’s chief financial officer, Nelson Chai, said that the growth in delivery, coupled with a reduction in costs across the business and a strong balance sheet, bolsters the company’s confidence that it can achieve adjusted EBITDA profitability before the end of 2021.

In May, Uber cut 6,700 jobs, or around one-quarter of its global workforce, as a way to dramatically cut costs and keep the business on track amid Covid-19 challenges.

Other changes at Uber

Earlier this week, Uber announced plans to extend its work-from-home policy until at least July 2021. Corporate employees at Uber will be given the option to work remotely until then, or return to offices earlier if necessary. The company is reportedly giving each member of staff $500 to pay for home office equipment in the meantime.

In other news, the company looks to be strengthening its position in the UK, announcing plans this week to acquire its largest UK competitor, Autocab. Founded in Manchester in 1989, Autocab provides ride-booking tech to independent taxi companies.

Autocab currently has a network in the UK called iGo that lets operators send and receive jobs, with access to 75,000 cars. The company also has operations in the US, Europe, Africa and Asia.

One of Uber’s plans for the acquisition is to explore additional revenue opportunities for Autocab drivers, including delivery.

Kelly Earley was a journalist with Silicon Republic