Sections

ideals
Business Essentials for Professionals



Uber Reduces Losses With Modest Growth In Ride Hailing And Continued Growth In Delivery


02/11/2021


Uber Reduces Losses With Modest Growth In Ride Hailing And Continued Growth In Delivery
Ride hailing company Uber Technologies Inc reported a small loss with the pandemic hit to its ride-hail and delivery businesses ebbed away from lows, the company said on Wednesday.
 
The company also said that it was in line to achieve an adjusted profit by the end of the current year.
 
During the latest ended quarter, customers residing in the outer limits and suburbs of cities have restarted using its online services. 
 
There has been resumption in leisure travel to restaurants and cultural events in countries such as Brazil and Australia which are almost near to normal and the company expects a quick bounce back once the pandemic ends. The company expects a slow recovery of business travel since many employees are still working from home.
 
The results prompted a 13 per cent drop in after-hours trading and gained 6 per cent during the day.
 
Shares of Uber’s smaller ride-hailing rival Lyft Inc said on Tuesday it could churn out a profit during the third quarter which was three months ahead of achieving a previous goal because of cost cutting and a rebound I the market for its service.
 
The loss for the quarter reported by Uber an adjusted basis before interest, taxes, depreciation and amortization was $454 million which was significantly less than what analysts had expected at a $514 million loss, according to Refinitiv data.
 
Throughout the last year, the company had implemented a slew of cost cutting measures which included an almost 30 per cent cut in its staff even at the starting of the year. according to analysts, Uber will emerge as a slimmer company after the pandemic because of its strategy divesting its ancillary units and focusing on its core ride hailing and food delivery business,
 
The profitability metric used by Uber is adjusted EBITDA, which excludes the cost of the company's extensive stock-based compensation and other potentially significant items.
 
In the months from October through December, Uber reported $3.17 billion in total revenue.
 
There was an almost 52 per cent year on year reduction in the fourth quarter of Uber’s at $1.47 billion but was 8 per cent higher on a quarter to quarter basis despite fresh lockdowns being implemented in the markets of the United States, Europe and the Middle East.
 
Uber however said that it was not possible for it to make prediction about the quarter when the volumes of its ride hailing services could return to pre pandemic levels. The company also said that it would take more time than the leisure and business trips to rebound for airport travel which accounts for about 15 per cent of the gross bookings for the company.
 
The company expects its adjusted EBITDA for its first quarter of the current year to be flat in comparison to the fourth quarter of last year.
 
Growth in the food delivery business of the company – Uber Eats, continued through the fourth quarter as new lockdown measures were implemented in a number of Uber’s markets including in the United States resulting closure of restaurants which prompted people to order food online.
 
For the fourth quarter, revenue from its delivery business more than tripled year on year at around $1.36 billion as it grew by 19 per cent in the fourth quarter compared to the previous quarter.
 
Its presence in the highly competitive segment has been increased by Uber as the company acquired smaller food delivery rival Postmates for $2.65 billion and alcoholic beverage delivery service Drizly for $1.1 billion. Both the deals were stock based and company expects to close the Drizly deal by later this year.
 
The company had also further reduced cost of operations during the fourth quarter with a 14 per cent drop in its total costs and expenses during the period.
 
Uber has sold two cash-burning units as a part of the strategy of focusing on its core business under the directive of the company’s Chief Executive Dara Khosrowshahi.
 
(Source:www.businessworld.com)