Uber Delivers First-Ever Operating Profit in Drive to Curb Losses
Uber Technologies posted its first-ever operating profit in the second quarter, a milestone in its long-term efforts to stem losses in its businesses carrying people and delivering food. The results for the three months through June were driven by solid growth in both of Uber’s core businesses, as the number of rides in the U.S. and Canada surpassed prepandemic levels for the first time and demand for delivery stayed strong despite restaurant reopenings.
The quarter was the first since Uber’s 2009 founding that it reported its underlying operations were profitable. The operating performance helped lift Uber to a net profit in the quarter. Uber has posted a net profit before but on the back of investment gains that outweighed losses in its operations. The company projected continued growth for the third quarter ending Sept. 30.
Uber shares declined 3.5% in morning trading after the company announced its earnings Tuesday. Uber on Tuesday posted a profit of $394 million during the second quarter, compared with a loss of $2.60 billion a year earlier. That came in better than the $18 million loss that analysts polled by FactSet had expected and was driven predominantly by its operating profit, which totaled $326 million. Uber’s revenue rose 14% to $9.23 billion. Its gross bookings, or the total value of transactions on its app, grew 16% to $33.60 billion. Bookings are indicative of consumer demand, while revenue refers to Uber’s cut from it. Uber projected gross bookings between $34 billion and $35 billion in the current quarter. Analysts polled by FactSet expect third-quarter bookings of $34.09 billion.
Uber has cut hundreds of jobs this year, including in its overseas food-delivery operations. Uber’s freight division, which transports goods for companies and typically accounts for under a quarter of revenue, didn’t do as well. Bookings and revenue in the unit slid by 30% during the quarter. Uber expanded advertising on its app, reaching a run rate of $650 million during the quarter. It reined in costs by becoming more disciplined about spending on discounts to consumers and incentives to drivers. It said it has become better at combining deliveries and reducing errors, which improved its operational efficiency.
Uber has cut hundreds of jobs this year, largely in human resources, freight and overseas food-delivery operations. The cuts—collectively accounting for less than 3% of staff—haven’t been as dramatic as those at many of its tech peers. The company was more aggressive about layoffs in 2020, during the initial months of the pandemic
The company said Chief Financial Officer Nelson Chai will step down in January. A search for his successor is under way. Chai joined Uber as CFO in 2018 and led the company’s initial public offering a year later. He oversaw major deals, including Uber’s acquisition of Postmates in 2020. “With continued rigor around costs and a balanced capital allocation approach, we are well positioned to sustain strong incremental profit generation,” Chief Executive Dara Khosrowshahi said in prepared remarks. “We also know that expectations—rightly—are only getting higher.”
