Uber misses on profit even as rideshare, delivery trips soar
The company says that adjusted Ebitda for the fourth quarter will be US$2.41 billion to US$2.51 billion
[SAN FRANCISCO] Uber Technologies shares fell after the company posted a miss on third-quarter operating income and issued an adjusted earnings forecast for the current period that also fell short of analysts’ estimates.
Operating income for the three months ended Sep 30 came in at US$1.11 billion, the company said in a statement on Tuesday (Nov 4).
Analysts were expecting US$1.62 billion, according to Bloomberg-compiled data. That was partially due to undisclosed legal and regulatory matters, chief financial officer Prashanth Mahendra-Rajah said in prepared remarks.
Adjusted earnings before interest, taxes, depreciation and amortisation came in at US$2.26 billion, slightly below estimates.
Uber also said that adjusted Ebitda for the fourth quarter will be US$2.41 billion to US$2.51 billion. The mid-point of that range is below the average analyst estimate of US$2.49 billion.
Shares of Uber fell 3.9 per cent in premarket trading in New York.
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The earnings results and outlook overshadowed an otherwise upbeat report, including Uber’s strongest quarterly growth since late 2023.
Customers ordered more rides and deliveries than expected, a sign the company’s efforts to offer a wider range of services in more geographies are bearing fruit.
Total gross bookings – a closely watched metric that includes ride hails, delivery orders and driver and merchant earnings but not tips – grew 21 per cent to US$49.7 billion for the third quarter, topping analysts’ estimates.
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Chief executive officer Dara Khosrowshahi said in prepared remarks that trip growth in the US accelerated due to an “increasing adoption of low-cost offerings and moderating insurance pressures,” while strong summer travel activity boosted international demand.
That led to a strong jump in overall trip volume during the third quarter, which Uber said is the biggest increase in its history outside of a post-pandemic rebound.
The company expects the momentum to continue as it heads into its busiest period. The fourth-quarter bookings forecast of US$52.25 billion to US$53.75 billion also beat estimates, representing an 18 per cent to 22 per cent growth rate, according to Bloomberg calculations.
Wall Street’s sour reaction to the results carries echoes from last quarter, when investors were disappointed by muted growth in the rideshare unit. The San Francisco-based company has been courting different customers in various budget brackets and continuing an international expansion.
These latest results could colour expectations for other ride-hailing and food-delivery companies, as investors watch closely for clues about the health of the US consumer.
Rideshare peer Lyft and delivery rival DoorDash are both scheduled to report results after the close on Wednesday. Lyft’s stock similarly fell 2.8 per cent in premarket trading, while DoorDash fell 1.3 per cent.
Uber is planning to change how it reports profitability starting the first quarter of next year, by shifting to reporting adjusted operating income from adjusted Ebitda. It will also move to forecasting adjusted earnings per share when it gives first-quarter guidance.
Mahendra-Rajah said the new format does not change the company’s three-year outlook. “We are well-positioned to deliver on our long-term financial commitments while also making strategic investments to appropriately fund growth initiatives,” he said in his remarks.
Strategy blueprint
Khosrowshahi on Tuesday publicly outlined for the first time the six strategic areas where Uber is focused on growing in the medium term.
They include expanding its rideshare and delivery businesses, building a hybrid platform with both human and autonomous vehicles, offering multiple kinds of gig work, and developing generative artificial intelligence.
Uber has made public progress on those efforts, including striking more than a dozen autonomous vehicle partnerships, creating an AI labelling business for enterprises and launching new digital tasks for drivers.
The company only began sharing details of its vision earlier this year, and even then, its comments were meant just for employees.
Mahendra-Rajah said Uber has divested about US$1.4 billion in equity stakes from the US$10.3 billion it has invested in other companies. The proceeds will be allocated towards priorities such as launching more robotaxis globally. BLOOMBERG
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