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May 7, 2020
- Q1 revenue: $3.54 billion (+14% YoY, vs. $3.5 billion expected)
- Q1 loss: $2.9 billion (Up 190% YoY from loss of $1 billion in Q1 2019)
- Guidance: Uber withdrew its full-year guidance in mid-April, just months after CEO Dara Khosrowshahi told investors that the company was poised to hit profitability by Q4 2020. He's now aiming to shave $1 billion off spending this year.
The big number: Gross bookings for Uber's two main businesses — ride-hailing and food delivery — grew to a combined $15.8 billion in the first quarter, up 8% year-over-year despite a major slowdown in rides during the COVID-19 crisis. Whether these two parts of the whole can continue to work in equilibrium, versus one dragging the other down, will be key to Uber's long-term prospects. The company's stock was up after hours on the earnings news, after rising more than 11% on news of an investment deal with Lime scooters.
People are talking: "We're taking a hard look at our overall cost structure and our other bets to ensure our core business of rides and eats emerges stronger than ever," Khosrowshahi said on Thursday's earnings call. "Reaching profitability remains a strategic priority for us. We believe the disruption caused by COVID-19 will impact our timeline by a matter of quarters and not years."
Opportunities: With the ride-hailing market decimated by shelter-in-place orders, Uber's hopes for short-term growth now hinge on food and grocery delivery. "The big opportunity that we thought Eats was just got bigger," Khosrowshahi said. Uber Eats revenue was up 54% year-over-year, and the company is accelerating efforts to add products from grocery and convenience stores to its delivery options. Khosrowshahi emphasized the company's global scale and recent acquisition of Latin America grocery delivery startup Cornershop. In a thinly veiled jab at rival Lyft, he said Uber's diversification is now its biggest asset: "We believe we have a structural advantage. Rides-only players were substantially impacted." The Lime deal backed up this posturing, with Uber announcing it was leading a $170 million funding round while merging its Jump bike rental and scooter business into the electric scooter company.
Threats: Uber's ability to get back on track financially will depend on the depth of ride-hailing's decline amid social distancing. In a bid to slow the bleeding, Uber cut 3,700 jobs this week and announced a spending freeze on expansion projects in Dallas, Chicago and Mexico City. Still, Khosrowshahi predicted that "pre-COVID usage will build back steadily" after seeing early data from reopened markets like Hong Kong, Texas and Georgia, where rides have rebounded to 40% to 70% of pre-crisis levels. In the meantime, Khosrowshahi said the company is "working through" plans for both drivers and riders to wear protective equipment like masks, and is continuing long-term R&D work on automation with its Advanced Technologies Group.
The power struggle: Can Uber keep doing it all? And who will actually do the varied legwork required on the ground? Like Lyft and other gig companies, Uber is in the middle of a contentious regulatory battle over pay and employment benefits for contract workers — a fight poised to come to a head with a $90 million California ballot effort to roll back new protections under state law AB 5. There's also the question of how far Uber Eats will go to compete with grocery-focused gig economy companies like Instacart, potentially pitting the political allies directly against one another in a tumultuous business climate.
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Lauren Hepler ( @lahepler) is a former reporter for Protocol covering how people live and work in Silicon Valley. She previously covered development, energy, and tech for The New York Times, The Guardian, the LA Times, the Silicon Valley Business Journal, and others. Lauren can be reached at firstname.lastname@example.org (just ask for Signal), and you can share information with her anonymously via Protocol's SecureDrop. She grew up in Ohio and lives in Oakland.
February 26, 2021 13:45 EST
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