Uber’s Revenue Craters, as Deliveries Surge in Pandemic

OAKLAND, Calif. — Uber is synonymous all over the world with journey hailing. However because the coronavirus pandemic reveals few indicators of loosening its grip, the corporate might develop into extra intently related to one other enterprise: supply.Uber mentioned on Thursday that its ride-hailing enterprise had cratered within the second quarter as folks traveled much less within the pandemic. The corporate’s income fell 29 p.c to $2.2 billion from a yr in the past — the steepest decline since its preliminary public providing final Could — as its internet loss totaled $1.eight billion.However its Uber Eats meals supply service surged, with income greater than doubling from a yr in the past to exceed that of journey hailing for the primary time. Income for Uber Eats soared to $1.2 billion, whereas rides got here in at $790 million.Dara Khosrowshahi, Uber’s chief government, mentioned in a name with traders on Thursday that the numerous pandemic responses all over the world had created “a story of 10,000 cities” for the corporate, with enterprise recovering in some areas and never in others.Despite the challenges, he mentioned supply was “a really high-potential alternative” for Uber to broaden even additional by providing deliveries of dwelling items, prescription medicines and pet provides.Uber has doubled down on meals supply in current months. In Could, Mr. Khosrowshahi sought to accumulate Grubhub, a supply service, however the firms struggled to agree on phrases and to take care of potential antitrust scrutiny. Final month, Uber mentioned it could as a substitute purchase the supply service Postmates in an all-stock deal valued at $2.65 billion.Shopping for Postmates is predicted to provide Uber roughly 35 p.c of the U.S. meals supply market, analysts mentioned. That may enable Uber to problem the supply chief, DoorDash, which is estimated to have a 45 p.c market share. The combined outcomes despatched Uber’s share value down greater than 2 p.c in after-hours buying and selling.“Proper now, they’re swimming within the purple ink,” mentioned Dan Ives, managing director of fairness analysis at Wedbush Securities. “Traders are nonetheless giving them the advantage of the doubt due to Uber Eats.”Uber has persistently misplaced cash, and Mr. Khosrowshahi stays underneath strain to make it worthwhile. The corporate’s internet loss within the second quarter narrowed from $5.2 billion a yr in the past, when it was coping with stock-based compensation prices from its preliminary public providing. Uber mentioned it nonetheless supposed to develop into worthwhile someday subsequent yr.The corporate additionally mentioned there have been some indicators that its rides enterprise was enhancing internationally. In France, enterprise had recovered about 70 p.c, it mentioned, whereas rides to work and to social gatherings in locations akin to Hong Kong, New Zealand and Sweden had been increased than that they had been earlier than the pandemic.However in america, which is one among Uber’s largest markets, rides had been down 50 p.c to 85 p.c in lots of main cities.Uber additionally faces authorized challenges in California and Massachusetts, the place the state attorneys common have sued Uber and Lyft for violating labor regulation. Drivers in each states needs to be categorized as staff, not unbiased contractors, and be entitled to full employment advantages, the states have mentioned.If the lawsuits are profitable, they may diminish Uber’s enterprise as a result of it could make it dearer to function, analysts mentioned.“It is going to be laborious to argue that Uber and Lyft are the way forward for transportation,” mentioned Tom White, an analyst for D.A. Davidson. “These guys will look much more like tech-centric, tech-smart taxi operators.”Most drivers choose to stay unbiased contractors, Mr. Khosrowshahi mentioned. “We’re assured in our place,” he mentioned.

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