Uber Posts First Annual Profit Since Its IPO
Uber Technologies posted its first full-year profit as a public company last year and projected continued growth in the first quarter of 2024, marking the end of an era in which the ride-sharing and food-delivery company gave priority to growth over profits.
The company had a profit of $1.43 billion in 2023, which included a $1 billion benefit from its equity investments as well as income from its operations. The company turned an annual profit once before, in 2018, on the back of its investments, but it wasn’t earning money from its operations until now. The company went public in 2019.
“2023 was an inflection point for Uber, proving that we can continue to generate strong, profitable growth at scale,” Chief Executive Officer Dara Khosrowshahi said in prepared remarks.
The company’s performance in the last three months of 2023 suggests that demand for its ride-sharing and food-delivery services remains strong. The total value of transactions on its app grew 22% to $37.58 billion. Uber’s revenue, or its cut from those transactions, increased 15% to $9.93 billion. The quarterly figures were slightly higher than Wall Street’s expectations.
The easy availability of capital for much of the past decade had Uber and other startups burning through tens of billions of dollars in an attempt to gain market share. From 2016 through the first quarter of 2023, Uber collectively racked up close to $30 billion in operating losses, according to S&P Global Market Intelligence. The company posted its first quarterly operating profit in the second quarter of 2023. The company was founded in 2009.
Uber started to rein in costs in 2019, and then the pandemic hit and crushed its ride-hailing operations. Its smaller food-delivery unit became the company’s lifeline. The company cut its head count and shed noncore businesses such as self-driving cars during the pandemic. Those savings helped it navigate a more recent economic downturn.
It was also better than its rival Lyft at responding to a yearslong driver shortage after the economy reopened from Covid-19 lockdowns. That helped Uber gain market share.
Lyft, which trimmed its losses over the years and is now led by a new CEO, has yet to post its first operating profit. It is scheduled to unveil its results next week.
As of Tuesday’s market close, Uber’s shares more than doubled over the previous 12 months. The tech-heavy Nasdaq Composite Index rose around 30%, and Lyft shares fell around 25% over the same period.
Uber expanded advertising on its app over the past year. It says it has continued to become more disciplined about spending on discounts to consumers and incentives to drivers. It says it has also become better at combining deliveries and reducing errors, which has improved its operational efficiency.
In the last three months of 2023, the company’s mobility revenue grew 34% and its delivery revenue expanded 6%, while its revenue from freight declined 17%.
Uber cut hundreds of jobs last year to keep itself lean. In January, it said it was closing the alcohol service Drizly as it aimed to integrate it fully into its Uber Eats service.
Regulatory challenges loom for Uber’s food-delivery unit. New York City and Seattle recently adopted new laws aimed at raising driver pay, leading Uber Eats to charge new fees to consumers to make up for additional costs.
