Uber sees US$1.8b loss as pandemic stalls revenue

Marco Green
August 8, 2020

APUber also faces legal challenges in California and MA, where the state attorneys general have sued Uber and Lyft for violating labor law. In the quarter, food delivery brought in more revenue than rides.

Delivery revenue, which was growing even before the pandemic, surged 103 per cent during the quarter and is now central to Uber's strategy.

Uber Eats revenue grew 113% to roughly $1.2 billion, while bookings for the ride-sharing service tumbled 73 percent, the San Francisco-based company said in a statement.

Ride-hailing trips, in the past responsible for almost two-thirds of Uber's revenue, increased 5 percentage points from their low in April, but gross bookings remained down 75% from a year ago.

Uber's second-quarter revenue fell 29% to $2.24 billion from the year prior, beating analysts' average estimate of $2.18 billion, according to IBES data from Refinitiv.

Uber chief executive Dara Khosrowshahi said the two sides of the business will help the firm navigate the challenges ahead.

As some people stay closer to home, more people are ordering from Uber Eats than ever before, Khosrowshahi said.

Uber even pared back its global food delivery operation by exiting more than a half-dozen markets to make room for expansion in more developed ones. Along with a US$2.65 billion deal to acquire Postmates Inc. and expand its food delivery operations, Uber has begun delivering other items including groceries, prescriptions and packages.

The fall came despite a boom in its food delivery business, which saw orders more than double. That would allow Uber to challenge the delivery leader, DoorDash, which is estimated to have a 45% market share. Uber was dealt setbacks over the past year in California, where a new law is created to give employee benefits to its workers, and NY, where courts have sided with some drivers.

Despite all that, Uber Eats still lost money-$232 million for the quarter.

Khosrowshahi said Uber hopes to resolve the California crisis with a voter proposition to replace the law with a plan that keeps driver independence with some modifications.

He also said he hasn't seen any signs there will be "permanent damage" to Uber as a result of the pullback, but declined to provide a date for a full global recovery.

But in the United States, which is one of Uber's largest markets, rides were down 50% to 85% in many major cities.

Mr Khosrowshahi said he thought the firm had a "strong path" to fight those claims or win support among state voters for legislation that would overturn a California law meant to force Uber to change its driver classification.

Uber, Lyft and DoorDash are backing the ballot initiative in November's election which would classify rideshare drivers and other gig-economy workers as independent contractors while offering certain benefits such as minimum wage, sick leave and workers' compensation.

If the lawsuits are successful, they could diminish Uber's business because it would make it more expensive to operate, analysts said.

Other reports by Click Lancashire

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