Uber is optimistic for a rebound after losing $2.9bn in Q1

8 May 2020154 Views

Share on FacebookTweet about this on TwitterShare on LinkedInPin on PinterestShare on RedditEmail this to someone

Image: © NYCStock/Stock.adobe.com

Share on FacebookTweet about this on TwitterShare on LinkedInPin on PinterestShare on RedditEmail this to someone

While Uber’s ride-hailing business suffered as a result of the coronavirus pandemic, Uber Eats has seen increased demand in recent weeks.

Uber published its results for the first fiscal quarter of 2020 on Thursday (7 May), reporting a loss of $2.9bn. With a sharp decline in users traveling with Uber’s ride-hailing business as a result of Covid-19 restrictions, it marked the company’s biggest loss in three quarters.

However, while ride-hailing suffered a 3pc decline, Uber Eats saw bookings increase by 54pc year over year, as consumers turned to takeaways during the crisis. Revenue was up 14pc to $3.54bn, and the company reported a per-share loss of $1.70.

The results come after Uber announced earlier this week that it plans to lay off 3,700 full-time employees, which makes up nearly 14pc of the company’s workforce.

“This is one part of a broader exercise to make the difficult adjustments to our cost structure (team size and office footprint) so that it matches the reality of our business (our bookings, revenue and margins),” said CEO Dara Khosrowshahi.

Uber’s outlook

The earnings report covers the period up to 31 March, but on a conference call with investors, Khosrowshahi added that the company’s rides business was down by 80pc in April.

Support Silicon Republic

However, Uber’s business is starting to rebound in some parts of the world. In Hong Kong, business is back to 70pc of pre-crisis gross bookings, and a survey of French Uber users claimed that two-thirds expect to take their next Uber ride within a month, while 90pc expect to be back in an Uber in less than three months.

Quartz suggested that these hints of recovery are what resulted in an 11pc increase in Uber stock price in after-hours trading.

‘Along with the surge in food delivery, we are encouraged by the early signs we are seeing in markets that are beginning to open back up’
– DARA KHOSROWSHAHI

Khosrowshahi said: “While our rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet, focus additional resources on Uber Eats and prepare us for any recovery scenario.

“Along with the surge in food delivery, we are encouraged by the early signs we are seeing in markets that are beginning to open back up. Our global footprint and highly variable cost structure remain an important advantage, as our expectation is that the rides recovery will vary by city and by country.”

The company’s CFO, Nelson Chai, added that the company’s “ample liquidity” provides flexibility to deal with the current crisis, but that the company is still taking proactive steps to emerge stronger from the situation.

“We have recently exited eight unprofitable Eats markets, significantly reduced the size of our customer support and recruiting teams, and merged our Jump unit into Lime,” Chai said. “Building on the steps we have already taken, we are continuing to look at all levers to ensure our core rides and Eats businesses emerge from this crisis stronger than ever.”

Kelly Earley is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com