Uber continues recovery but loses $5.6 billion from investments
By Kellen Browning
Uber reported strong growth in its ride-hailing and delivery businesses last week and said it was continuing to bounce back from a pandemic slump, even as it lost $5.6 billion because of its investments in other ride-sharing companies, primarily the Chinese service Didi.
The company reported $6.9 billion in revenue for the first three months of 2022, outstripping analysts’ expectations and skyrocketing 136% from the same time last year, when COVID-19 vaccines were scarce and people were not traveling as much. Uber also said it had logged 1.7 billion trips during the quarter, an 18% increase from a year earlier, and had 115 million people using its platform each month, a 17% increase.
Throughout the pandemic, Uber’s financial results have been an indicator of broader economic health and appetite for travel, with the company’s weaker quarters corresponding to spikes in coronavirus cases and increased lockdowns, and with stronger results generally indicating periods of greater normalcy.
Now, “as people have returned to offices, restaurants, pubs, stadiums and airports around the world, they’ve returned to Uber,” Dara Khosrowshahi, the company’s CEO, said in prepared remarks to investors. He added that the company’s results “make clear that we are emerging on a strong path out of the pandemic.”
Still, Uber’s investments in other ride-sharing businesses continue to hamper its bottom line. Of its nearly $6 billion in losses, $5.6 billion came from changes in the valuation of other companies in which it has a stake. Didi’s value has plummeted since it went public last year.
Revenue from Uber’s ride-hailing business surged nearly 200% from a year earlier — despite a slowdown at the beginning of the quarter because of the omicron variant of the coronavirus — and Uber’s food-delivery business grew 12% even though people have largely returned to restaurants and grocery stores.
Although Uber’s business continues to lose money, it said it was drawing closer to profitability. Excluding certain expenses like stock compensation and the Didi losses, Uber had another profitable quarter, and its free cash flow approached a break-even point.
Drivers, who power Uber’s business — as well as the business of other gig economy companies like Lyft, DoorDash and Instacart — have said high gas prices in recent months, stemming in part from the Russian invasion of Ukraine, have made it more difficult to make a living driving for Uber. Some have said they are cutting back their hours or quitting the platform. And the value of Uber’s stock, similar to other gig economy companies, has fallen more than 30% since the beginning of the year.
Uber, which had already been spending heavily to lure back drivers who left early in the pandemic, responded in March by charging riders a small fuel fee for each trip, which went to drivers, and said Wednesday that it had more drivers on its platform than at any time since the pandemic began.
That confidence — and its rosy outlook for the next quarter — differed starkly from Lyft, which reported financial results Tuesday. Lyft’s stock plunged 25% in after-hours trading after its executives said on an earnings call that they were still struggling to persuade drivers to return to the platform and would be spending more money to encourage them to do so.
Uber’s shares fell along with Lyft’s, and Uber said shortly after that it would release its financial results hours earlier than initially planned Wednesday, seemingly in an attempt to differentiate its results from Lyft’s and preempt a drop in its stock when the market opened later that morning. But Uber’s stock still fell more than 4% during normal trading hours.
On a call with investors Wednesday, Khosrowshahi acknowledged that Uber also needed to continue to increase the number of drivers on its platform. But he painted an optimistic picture of the company’s business by pointing to areas of potential growth, like Uber’s partnerships with taxi companies and its investments in the freight industry.
“There’s a lot of work to do ahead of us, but this is a machine that’s rolling,” he said of the supply of drivers, adding that Uber was “starting to show separation against our competitors.”