Uber on track to deliver profitable first quarter
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Uber said it was set to release its first-ever profitable quarter, on an adjusted basis, after more than a decade of spending billions of dollars in cash.
The ridesharing group, whose stock has fallen 37% since peaking in February, said on Tuesday it expected gross bookings from July to September this year to be between 22.8 and 23 , $ 2 billion, with adjusted earnings before interest, taxes, depreciation, and amortization of between minus $ 25 million and $ 25 million.
Despite the wide range of adjusted ebitda, Uber CFO Nelson Chai said that a below breakeven level would require a significant slowdown in activity for the remainder of September.
“With positive adjusted ebitda in July and August, we believe Uber is now heading towards the third quarter adjusted ebitda breakeven point, well ahead of our previous forecast,” Chai said, in a published brief. before the market opens on Tuesday.
The milestone comes after Uber ran a cumulative deficit – a measure of its total losses since its inception in 2009 – of $ 22.1 billion at the end of June.
Chai said Uber expected a stronger fourth quarter and the record predicted adjusted EBITDA to be between $ 0 million and $ 100 million.
Uber previously told investors it expected a loss “better” than $ 100 million for the third quarter. The company’s main rival in the United States, Lyft, has already achieved a quarter of positive adjusted ebitda, reaching the milestone during the April-June period of this year.
Adjusted EBITDA has been Uber’s preferred metric for the health of its underlying business since its IPO in May 2019, after careful consideration of its ability to make a profit.
In addition to discounting interest, taxes, depreciation and amortization, it also does not include costs related to discontinued operations, non-controlling interests, investments, compensation for basis, certain legal and regulatory charges and a number of other factors.
The company’s most recently disclosed net profit, for the second quarter of this year, was $ 1.1 billion – a figure spurred by previously unrealized gains in its investments, including China’s Didi. Without them, Uber would have lost around $ 771 million. Tuesday’s filing did not include any indication of expected net profit for the current quarter or the rest of the year.
Achieving the adjusted EBITDA profitability target will be seen as a feather in the hat for CEO Dara Khosrowshahi, who in 2017 was brought in not only to mop up an ethical mess left by co-founder Travis Kalanick, but also to eliminate the bloated parts of Uber’s business. The company no longer works on its own autonomous car, for example.
Uber also ditched food delivery markets where it was not competitive, such as South Korea, and saved money by moving much of its engineering workforce to India. .
In early 2020, the company laid off nearly 7,000 people and closed offices around the world, with Khosrowshahi blaming the “fucking virus.”
Despite the pandemic that has rocked the company’s ridesharing business – first with the lockdown, and now driver shortages – Uber has kept repeating its goal, first told to investors in late 2019, to post profitable quarterly adjusted ebitda by the end of this year. .
The company had correctly bet on the return of its ridesharing business, while demand for its Uber Eats food delivery business remained high after an increase during closures.
“They say the crisis is creating opportunities and that has certainly been true for Uber over the past 18 months,” Khosrowshahi said in Tuesday’s filing. “Uber is taking an important step. We also know that we still have a lot to prove and that we have to perform perfectly. “
Uber Eats continues to track rival DoorDash, which briefly outperformed Uber’s market capitalization for the first time last week, despite the delivery company having minimal global presence and no ridesharing activity.
According to data from Second Measure, DoorDash controls 57% of the U.S. meal delivery market, compared to 26% for the combined Uber Eats and Postmates. Uber acquired Postmates in July 2020 in a deal worth $ 2.65 billion.
Grubhub, the meal delivery company acquired by Just Eat Takeaway in Europe in June 2020, now accounts for just 16% of the US market, having been the market leader.
Additional reports by Tim Bradshaw