San Francisco-based Uber said in early November that it reported adjusted earnings before interest, taxes, depreciation and amortization of $8 million for the quarter ended September 30. This was the first time in its roughly decade history that Uber reported positive figures. This metric was helped by the improvement in its ride business and the continued strength of its food-delivery arm, Uber Eats.
“Our current goal is to continue to improve our adjusted EBITDA, but the real focus point is focusing on long-term growth,” said Chief Financial Officer Nelson Chai.
The company’s quarterly net loss, however, rose to $2.42 billion from $1.09 billion during the prior-year period, largely driven by losses from its equity investments in companies such as Chinese ride-hailing company Didi Global Inc. decreased.
Uber has posted net profit twice under generally accepted accounting principles, first in 2018 and again during the second quarter of this year thanks to an unrealized profit on investment holdings.
“Our intention is to achieve GAAP profitability,” said Mr. Chai, who has been Uber’s CFO since 2018 after stints at CIT Bank and Warranty Group as chief executive and finance chief at Merrill Lynch during the financial crisis and NYSE Euronext. before that.
The company, which is still working to achieve positive free cash flow, plans to update investors on its profitability goals and spending plans in February. Mr Chai declined to comment on when Uber might report a net profit based on the strength of its operations rather than investment profit.
Investors would like to see margin and market-share gains after years of heavy losses, said Nikhil Devnani, an analyst at Sanford C. Bernstein & Co. “Uber is a growth company, but it’s about profitable growth,” he said. The balance has to be struck between investing in a competitive distribution market and proving to the market that there is a high-margin business with cross-platform synergies.”
Uber’s ride-sharing business suffered heavy losses during the pandemic – bookings temporarily fell by 80% – prompting the company to cut costs by nearly $1 billion by laying off workers. The company also sold various assets, including its autonomous driving unit and bike and scooter business, while maintaining its freight business.
The company pulled out of several countries last year where it did not see itself achieving market leadership, Mr. Chai said. A spokesman said the move includes about 20 actions, including deals to exit and sell operations to rivals.
As it works to regain ground lost during the start of the pandemic, the company expects some increases in head count over time, but they will be limited, Mr Chai said. Uber had 24,700 employees for the quarter ended September 30, up from 21,600 a year ago. Drivers are not classified as employees, so they are not included in the tally. About 800 people work in finance, up from about 500 when Mr. Chai took over finance.
Mr. Chai is targeting $90 billion in annual gross bookings by the end of the year. These bookings, which refer to the total value of rides and goods sold through Uber, came in at $23.11 billion during the last quarter, up 57% from the prior-year period.
“If we’re looking at bookings totaling $90 billion then… the growth on that scale is pretty incredible,” Mr. Chai said. The company will, for example, continue to invest in services such as grocery and pharmacy delivery, he said.
Uber is already profitable in many of its markets, Mr Chai said, adding that revenue growth and economies of scale will help boost overall profits.
“One thing that’s lagging behind is Uber’s share price, which has fallen more than 16% since the start of the year. The finance chief said he’s checking the share price “frequently,” he said on Wednesday. Shares of Uber closed down 1.4% at $42.08.
Analysts and investors pointed to a number of levers that the CFO could pull, including selling or cutting its equity portion, releasing funds and increasing the take rate, the percentage of rental or delivery orders that Uber charges. .
“That’s some of the ways they’re getting profitability,” said Robert Molins, director of Gordon Haskett Research Advisors, a research provider. “The path is too long.”
Revenue, as a percentage of gross bookings in Uber’s mobility business, was up 22.3% during the latest quarter, up from 23.1% a year ago, while the take rate for the delivery business was up from 13.3% to 17.4%.
“We think the tech rate will increase in the US, and that is largely because we will be able to reduce some of that driver incentives,” Mr Chai said of financial aid aimed at attracting more drivers to his platform. Referring to. In other markets, for example Australia, pick up rates are likely to go down, he said.
As far as Uber’s interests in other companies are concerned, Mr. Chai said, “we believe many of the stakes will continue to accrue in value.”
In 2016, Uber sold its operations in China to Didi in exchange for a minority stake in the company. It now holds about 11% stake in Didi, subject to a lockup period that began with the Chinese company’s initial public offering. The lockup period expires at the end of the year, giving Uber the option to sell or reduce the stake.
In addition to its stake in Didi, Uber also has other equity stakes, including self-driving startup Aurora Innovation Inc.
Uber is benefiting from its strategy to sell more services to existing customers, said Dennis Allaire, partner at Soma Equity Partners, which held 8.25 million Uber shares during the most recent quarter.
“It is very intuitive to transact within the app,” said Mr. Allaire. “They have economies of scale.”
This story has been published without modification in text from a wire agency feed
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