Uber finds “silver lining” in pandemic

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The collapse in global demand for car reservations was offset by an increase in food delivery, said Uber, as the company reported higher-than-expected revenues for its first quarter as losses soared to almost $ 3 billion.

Investors boosted Uber’s shares by more than 5% after managing director Dara Khosrowshahi said recovery “green shoots” had appeared and suggested the company would benefit enormously from the new standard.

“There is a silver lining to this incredibly tragic Covid virus, is that the business we have of states, and the category in general, just seemed to be increasing dramatically – some would say by multiples,” said Mr. Khosrowshahi. .

The company’s loss of $ 2.9 billion for the quarter is almost 200% higher than last year. He attributed the loss to a previously announced $ 2.1 billion impairment charge on the value of his investments, which he blamed on the impact of the coronavirus pandemic. Uber’s portfolio includes minority interests in Didi Chuxing and Grab, a popular app in Southeast Asia.

Without these fees, Uber said its net losses would have been $ 1.1 billion. In the midst of the pandemic, the company’s goal of achieving profitability – it previously stated that it hoped to have a profitable quarter, on an adjusted basis, by the end of the year – was pushed back by “It’s a matter of quarters, not years,” said Mr. Khosrowshahi.

Dan Ives, analyst at Wedbush, said, “Overall, these results have been better than expected, although headwinds from Covid-19 have crushed carpooling growth.”

Rough reservations for the rides segment decreased 5% from the same time last year, but thanks to the Eats food delivery segment, Uber’s overall revenues increased to $ 3.5 billion , up 14% from 2019, and slightly above Wall Street expectations.

Eats’ gross bookings increased 52% year-over-year, although the division has always operated with a loss of $ 313 million, discounting interest, taxes, depreciation and amortization. The company’s overall ebitda losses amounted to $ 612 million, an improvement of 30% year-over-year, and better than analysts had expected.

The company did not offer guidance for the second quarter. He warned, however, that global travel fell 80% in April.

The number of trips has increased week by week in the past three weeks, said Mr. Khosrowshahi. In Georgia and Texas, two states that have controversial plans to reopen, gross bookings in major cities increased 43% and 50% respectively in the past week compared to the lowest week April.

Elsewhere, bookings in Hong Kong have returned to 70% of their pre-crisis levels.

Khosrowshahi predicted that Uber would be at the center of people’s plans to return to work, as they opt for carpooling instead of public transportation.

“Although our Rides business has been hit hard by the ongoing pandemic, we have taken swift action to preserve the strength of our balance sheet, focus our additional resources on Uber Eats, and prepare for any recovery scenario,” he said. -he declares.

“Along with the sharp increase in food delivery, we are encouraged by the first signs that we are seeing in the markets that are starting to reopen. Our global footprint and highly variable cost structure remain an important advantage as we expect Rides’ takeover to vary by city and country, “said Mr. Khosrowshahi.

Financial aid for drivers, as well as free trips and deliveries for vulnerable citizens and medical workers, cost the company $ 19 million, he said. An additional $ 5 million was spent on other measures related to Covid-19, primarily for the purchase and distribution of personal protective equipment.

The company announced on Wednesday that it would lay off 3,700 workers, or about 14 percent of its workforce, saying that further job cuts may be underway. If and when the business recovers, chief financial officer Nelson Chai told investors that they do not expect to rehire at the same level as before. “The reality is that the world has changed,” he said.

The company also recently abandoned its catering operations in seven countries and moved its food delivery efforts in the Middle East to Careem, a subsidiary. Uber announced Thursday that it has made a $ 170 million investment round in Lime scooter rental, an initiative that allows the company to transfer its Jump bikes and scooters division as far as the eye can see on its balance sheet. former rival.

Investors had been optimistic about Uber’s profits after encouraging signs of rival Lyft on Wednesday, which announced a better than expected first quarter and signs of recovery in the United States and Canada, despite a sharp drop in activity due to coronavirus. Trips for the month of April decreased 75% year-over-year, said Lyft general manager Logan Green, although he is showing signs of a slow rebound.

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