Tech

Uber shares shoot up after CEO says ride volume is increasing again after April bottom

Key Points
  • Ride-hailing giant Uber reported first-quarter results Thursday, including revenue of $3.54 billion and a net loss of $2.9 billion.
  • This week, Uber laid off about 14% of its corporate employees, about 3,700 people, to cut costs.
  • Uber was also sued, along with Lyft, by the state of California for allegedly misclassifying drivers as contractors, rather than employees to avoid paying for health benefits and other worker protections.  
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Uber Q1 net losses $2.9B adj vs. $1.4B estimated

Ride-hailing giant Uber just reported first-quarter results. The company's shares initially dipped after hours, but then shot up as much as 10% as CEO Dara Khosrowshahi expressed optimism that ride volume is picking up again after bottoming out in mid-April. The move came on top of an 11% gain during regular trading.

Here's how the company did:

  • Loss: $1.70 per share
  • Revenue: $3.54 billion
  • Rides (gross bookings): $10.87 billion
  • Eats (gross bookings): $4.68 billion

The net loss of $2.9 billion, total, included $2.1 billion in impairment charges from companies in which Uber has a stake,  but represented Uber's biggest loss in three quarters.

Gross bookings in Uber's core business segment, Rides, fell 5% from a year ago. However, on the company's earnings call, Khosrowshahi said that the Rides business was down around 80% in April from last year, but also gave reason for optimism, saying that ride volume had increased in each of the last three weeks.

In addition, gross bookings for its food delivery segment, Eats, were up more than 50% year-over-year as more people ordered food for delivery at home, and a greater variety of restaurants signed up to offer delivery, too. Khosrowshahi said that the company believes these cultural shifts could be long-lasting.

"The big opportunity we thought Eats was just got bigger," the CEO said. And he hinted at new services to enable retailers to send packages to customers using Uber's platform.

According to Refinitiv, analysts were expecting a loss of 88 cents per share and revenue of $3.5 billion. However, estimates range widely, and comparing Uber's actual results with these isn't straightforward given the unpredictable spread and impact of Covid-19.

On Wednesday, Uber said it was laying off 3,700 of its employees and that Khosrowshahi would forgo his base salary of around $1 million, for the rest of 2020. The layoffs impacted Uber's customer support and recruiting teams, primarily, and represent about 14% of the 26,900 people the company said it employed at the end of 2019. 

In sharp contrast to those cost-cutting measures, on Thursday, Lime announced that Uber was leading a $170 million investment into its electric scooter and bike rental business.

Much like its primary North American competitor Lyft, Uber has been struggling with the impacts of Covid-19 on drivers and riders alike, and now faces a labor lawsuit in the state of California. The suit, which was filed in San Francisco Superior Court this week, alleges that Uber and Lyft have managed to avoid paying for key benefits for their drivers, including paid sick leave, by wrongfully classifying them as contractors rather than employees.

Before the novel coronavirus turned into a global pandemic, Khosrowshahi said on the company's Q4 2019 earnings call that it was poised to hit profitability in Q4 2020, ahead of its original promise of profitability in 2021. Uber also told investors, on that last call, it expected a $1.35 billion loss for 2020 in earnings before interest, taxes, depreciation and amortization (EBITDA).

However, Covid-19 health orders from authorities around the world soon began to restrict people's work, recreation and travel more profoundly, and by April 16, Uber withdrew that prior guidance. It did not issue new guidance in its Q1 release. 

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Wedbush's Ygal Arounian and D.A. Davidson's Tom White on Uber earnings