Uber Technologies Inc. shares surged after the company reported earnings that beat analysts’ estimates, showing that consumers continue to spend more on rides and food takeout despite an uncertain economic outlook.
Adjusted earnings before interest, taxes, depreciation and amortization reached $761 million in the first quarter, the company said in a statement Tuesday. That beat the $678.6 million analysts were predicting, according to data compiled by Bloomberg.
“We delivered record profitability and free cash flow in Q1, and we are poised to expand profitability again in Q2,” Chief Financial Officer Nelson Chai said in the statement.
Shares jumped as much as 7.6% to $35.20 in New York. That brings this year’s gains to 40%.
The results signal that the San Francisco-based company is weathering slowing economic growth and rising inflation better than expected, even as spending in retail and other areas suffers. It’s also been outshining rival Lyft Inc., which is overhauling operations in the face of sluggish demand and weak profits. Lyft is set to report its results later this week.
“This was a quarter Uber should frame in its HQ as it speaks to a ‘new and improved’ Uber story going forward,” Dan Ives, an analyst at Wedbush Securities, wrote in a note to investors after the results.
Uber generated $31.4 billion in gross bookings, which include ride hailing, food delivery and freight. That was slightly below the $31.5 billion Wall Street had forecast as a decline in freight volumes dragged down overall bookings.
Even though the company saw fewer-than-expected monthly active users, ride-hailing bookings of $15 billion beat projections — an indication that customers are taking trips more frequently. The increased engagement was attributed in part to lower fares.
New mobility products also helped attract drivers and riders to the platform, Chief Executive Officer Dara Khosrowshahi said in prepared remarks. That’s help improve profitability “even as our competitors continue to compete on incentives and price,” he said. Uber said active ride-share drivers were up 35% compared with last year, reflecting an increase of more than 1 million.
Uber was hit hard when the pandemic decimated demand for rides. Though it was able to cushion the impact with its delivery unit — Uber Eats, which grew rapidly as millions of couch-bound customers ordered takeout — the company struggled to overcome a shortage of drivers after cities began reopening. That sent wait times and fares soaring.
Lyft also had a hard time bringing the number of drivers and riders into balance. Both companies spent millions in incentives to lure workers back to their apps. But Lyft has had a harder time getting back on track. Its comeback efforts have included hiring a new
CEO, David Risher, laying off thousands of workers and calling its remaining staff back to the office. But Lyft has fewer active riders than it did before the Covid-19 pandemic.
Khosrowshahi said in a conference call with analysts that Lyft is a “very, very strong brand” and “isn’t going anywhere.” He added that Lyft’s move to lower prices will result in a more competitive environment for service levels and reliability.
“I think the market has said very clearly that the days of paying for share and essentially using shareholder money to buy share temporarily, those days are over,” Khosrowshahi said.
Uber commanded 76% of US ride-share sales in March, up from 66% in early 2020, according to research firm YipitData. Uber, which reduced headcount earlier in the pandemic, hasn’t announced widespread cost cuts or layoffs.
Still, the company said it has lowered headcount through performance reviews during the first quarter and expects its workforce to be “flat to down” in the quarters ahead, without specifying the exact decrease in jobs. Uber Freight, its logistics unit, also cut 3% of its workforce in January.
The company reported $8.8 billion in revenue during the period ending March 31, surpassing analysts’ expectations of $8.7 billion. Uber expects adjusted earnings before interest, taxes, depreciation and amortization of $800 million to $850 million in the current quarter.
By Jackie Davalos / Bloomberg
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