Uber continues to hemorrhage cash during the pandemic despite growth in delivery

Andrew Cummings
August 8, 2020

This quarter's results canceled a decade of steady growth in Uber sales, dropping sales by 29% in the second quarter.

Uber has been working to offset the collapse of its core taxi business due to the pandemic by increasing its food delivery operations. Analysts expected less from delivery and more from ride-hailing in the quarter.

The San Francisco-based ride-hailing giant brought in USD2.24 billion in revenue during the second quarter, down 27 per cent from the same time previous year, on a constant currency basis, the company said on Thursday. Total Adjusted-net revenue was down 33% at $1.91 billion.

Uber's earnings report comes a day after the company announced that it had acquired Autocab, a United Kingdom -based provider of booking and dispatch software for independent taxi companies for an undisclosed price.

The company ended the quarter with US$6.8 billion in unrestricted cash, US$1 billion in short-term investments and equity stakes in Didi, Grab and Yandex totaling US$9.4 billion.

"Our Mobility segment generated 50 million USA dollars in Adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) profit, despite a 73 percent year-over-year decline in Gross Bookings, on a constant currency basis", said Nelson Chai, Uber's CFO.

Besides, COVID response initiatives added $48 million to the net loss incurred by Uber Technologies.

The number of people using Uber's platform each month, a closely watched measure of engagement, shrank 44% in the second quarter to 55 million customers, much worse than analysts' expectations of a decline of about 7%. He reaffirmed their target to achieve adjusted EBITDA profitability by the end of 2021.

Its revenue fell in the USA and across the world except in the Asia-Pacific region.

Gross bookings in delivery were accelerated amidst the pandemic- induced home delivery demand push. Analysts on average expected an adjusted loss of $883 million, according to data compiled by Bloomberg. Uber Eats crossed 500k active partnered restaurants in June, up by 50% year-over-year.

Last month, Uber agreed to acquire rival Postmates Inc.in a tie-up that would allow the company to find savings amid the costly work of building out a delivery empire and to compete with deep-pocketed rivals. "Among other new delivery services the company is offering, Uber Connect lets users send small packages via UberX drivers to local destinations". With new partnerships, it improved real-time pricing and tendering capabilities through direct API integration with its shippers.

Delivery revenue is now central to the Uber strategy. The company booked $382 million in restructuring costs in the second quarter linked to its efforts to become leaner. Uber intends to use the funds for working capital and general objective, including potential acquisitions.

The fall came despite a boom in its food delivery business, which saw orders more than double. It also completed the purchase of Cornershop in all jurisdictions, except Mexico.

"The businesses that are interfacing with the public are bleeding out, and it's a concerning time for investors that are involved", said Eric Schiffer, CEO of the Patriarch Organization private equity firm. Autocab also match trips via iGo marketplace.

In the first half of 2019, public markets grew uneasy about the near term outlook of the global economy.

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