Davos WEF

Uber has a better shot at reaching profitability than its competitors, CEO says

Key Points
  • Uber is better equipped than "anyone else" in the ride-hailing space to reach profitability, CEO Dara Khosrowshahi says.
  • After the firm's deal to sell its Eats business in India to Zomato, Khosrowshahi says "consolidation has got to happen."
  • Khosrowshahi says Uber aims to be the "number one and number two" player in the markets it operates in, rather than "number three or number four."
Dara Khosrowshahi, CEO of Uber, appears on CNBC's Squawk Box at the 2020 World Economic Forum in Davos, Switzerland on Jan,. 22nd, 2020.
Adam Galici | CNBC

Uber is better equipped than its competitors to turn ride-hailing into a profitable business, the company's CEO told CNBC.

"We are by far the global leader in ride-sharing," Dara Khosrowshahi told CNBC's "Squawk Box" at the World Economic Forum in Davos, Switzerland. "We are structurally set up more efficiently and more optimally than anyone else to move to profitability. So actually this environment is perfect for us."

Uber has looked to wind back operations in markets where it's struggled to gain a foothold and generate profits in recent years. The company on Tuesday agreed to sell its Eats food delivery business in India to Zomato, a local start-up that counts Alibaba affiliate Ant Financial as one of its investors.

Notably in 2016, Uber sold its Chinese business to domestic giant Didi Chuxing, while in 2018 the firm exited Southeast Asia through a deal with Singapore's Grab. It also has a joint venture with Russian internet giant Yandex to provide its taxi services in the country.

U.S. ride-hailing firms Uber and Lyft have faced questions from investors over their cash-burning business models, following listings of their shares in New York last year. Shares of both companies have fallen significantly since their market flotations.

Uber is down nearly 10% since its initial public offering, while Lyft has slumped almost 40%. Their fortunes could be starting to turn around though — shares of Uber and Lyft are now up 26% and 12% respectively since the start of 2020.

'Consolidation has got to happen'

On the Zomato deal, Khosrowshahi said Uber's decision to take a minority stake in the Indian firm made sense "as opposed to making two bets alone and competing with each other." Uber now owns just under 10% of the Indian restaurant aggregator as a result of the all-stock transaction.

"The vision for growth is absolutely there, but it's growth that makes sense, and we've been sellers in some spots and we've been buyers as well," the Uber chief said. "The point is consolidation has got to happen. At some point that growth has to consolidate."

He said the company aims to be the "number one and number two" player in the markets it operates in, rather than "number three or number four."

The company continues to face heavy competition on the food delivery front, particularly in Europe where the sector has been increasingly consolidating. At the start of the year, Dutch company Takeaway.com won a takeover battle to buy Just Eat, which is a major player in the U.K.

Another British online takeout firm, Deliveroo, last year attracted a $575 million investment led by Amazon, though that's been frozen for now as the U.K. antitrust regulator conducts an in-depth investigation into competition concerns surrounding the deal.

To add to Uber's woes, the company has been in blocked from operating in London by the local transport authority, Transport for London (TfL). For now, the company can continue operating in the city — its most important European market — while it appeals the decision in court.