Uber makes first operating profit as driver shortage eases

Uber forecast an adjusted profit of US$25 million to US$75 million for the last quarter of 2021. PHOTO: REUTERS

AUSTIN, TEXAS (REUTERS) - Uber Technologies on Thursday (Nov 4) reported its first profitable quarter on an adjusted basis since it launched more than a decade ago with its two most important segments, ride-hailing and restaurant delivery, both turning the corner.

Company executives allayed investor concerns about a shortage of drivers, telling analysts that spending on incentives to entice drivers back on the road after the coronavirus pandemic was largely behind the company.

But a massive drop in the value of its stake in Chinese ride-hailing company Didi drove a US$2.4 billion (S$3.24 billion) net loss in the third quarter.

Uber reported adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) of US$8 million for the quarter ended Sept 30. That compared with a loss on the same basis of US$625 million a year ago.

Uber forecast an adjusted profit of US$25 million to US$75 million for the last quarter of this year. Analysts on average expected US$114 million, according to Refinitiv data.

Despite the adjusted profit, Uber's earnings report came as a disappointment after smaller United States rival Lyft on Tuesday reported its second consecutive quarterly adjusted profit at US$67.3 million and said it expected adjusted Ebitda of between US$70 million and US$75 million in the fourth quarter.

Uber's and Lyft's operations have yet to become profitable on a net basis, and the companies decline to provide guidance of when that might happen.

A drop in value of Uber's holding in Didi and stock-based compensation payments resulted in a net loss that more than doubled from last year.

Didi, which went public in June, saw its market capitalisation drop by billions of dollars after China's market regulator launched an antitrust probe.

In Uber's real-world business, total revenue grew 72 per cent to US$4.8 billion, above an average analyst estimate of US$4.4 billion, according to IBES data from Refinitiv.

Uber's delivery business, which includes restaurant food and store deliveries, emerged as the company's backbone during the pandemic. Delivery revenue saw a steady increase in the third quarter, signalling that growth in riders did not come at the expense of its Uber Eats unit.

The company's core restaurant delivery business, which makes up some 96 per cent of delivery gross bookings, was profitable for the first time on an adjusted Ebitda basis in the third quarter, Uber said.

Consumers were travelling in greater numbers in the third quarter and its driver and courier base had grown by nearly 640,000 people since January, Uber said. The company spent more than US$250 million to lure drivers back after the pandemic.

Uber did not provide data on how driver numbers compared with pre-pandemic levels. Uber chief executive Dara Khosrowshahi said the company wanted to grow its driver base beyond 2019 levels to meet expected demand.

Ride bookings in the quarter remained more than 20 per cent below third-quarter levels in 2019, but Uber said ride unit margins had returned to pre-pandemic levels.

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