NEW YORK: Uber Technologies Inc reported widening losses as it spent more to entice drivers to return to its platform, sending shares of the ride-hail and food delivery company down in after-hours trade.
Investors sold the shares despite Uber management’s assurances that the company can deliver a sharp turnaround in profitability even as New York and other major cities reimpose some pandemic restrictions.
Uber posted an adjusted US$509mil (RM2.15bil) second-quarter (Q2) loss before interest, taxes, depreciation and amortisation – a metric that excludes one-time costs, including stock-based compensation – widening losses by nearly US$150mil (RM633.52mil) from the first quarter.
Analysts on average had expected the company to report an adjusted loss of around US$324.5mil (RM1.37bil), Refinitiv data showed.
The company also warned investors that uncertainty from the Delta variant of the coronavirus continues to impact visibility into recovery.
But Uber chief executive Dara Khosrowshahi told analysts on a conference call that the company’s food delivery business provided a hedge against potential ride-hail declines and that July trends support the company’s confidence for the second half of the year.
Gross bookings during the second quarter reached an all-time high of nearly US$22bil (RM92.92bil), with more passengers returning for trips while food delivery orders also increased.
Nevertheless, the earnings call was dominated by questions over driver supply and the ongoing impact of the pandemic.
Investors are worried about the ongoing shortage of drivers in the industry as demand ramps up. Uber’s smaller rival, Lyft, on Tuesday said it expected limited driver supply to continue in the next quarter, requiring further investments in driver incentives.
Uber said riders returned to its platform in greater numbers in July and it expects the trend to continue in the coming months, together with strong food delivery orders.
Uber reaffirmed its goal of hitting profitability on an adjusted Ebitda basis at the end of this year and said it would reduce losses to US$100mil (RM422.35mil) in the third quarter.
That assumes the more contagious Delta variant does not reverse a gradual reopening of the United States economy, an issue that Lyft said on Tuesday it was monitoring.
Uber said monthly active drivers and food delivery workers had increased by nearly 420,000 from February to July. Passenger wait times in major US cities also decreased during that time, the company said.
Uber spent a massive US$250mil (RM1.06bil) in driver incentive investment in the second quarter, which increased losses at its ride-hail business. Uber said mobility profitability will expand significantly as US and Canadian driver investments fade, a trend it has witnessed in Australia and other markets.
US driver supply increased by 30% from June to July, even as incentives were reduced. — Reuters