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Uber Posts Quarterly Profit As Ride Demand Recovers, Delivery Remains Strong

By Dave Simpson

Uber Technologies Inc UBER.N has reported its second quarterly operating profit as demand for its ride-hailing service approached pre-COVID-19 pandemic levels and its food delivery business turned profitable for the first time.

Pick Up In Business

The company's first-quarter outlook fell short of Wall Street expectations as the Omicron COVID-19 variant dampens travel, but Uber chief executive Dara Khosrowshahi said business had started picking up into February.

"While the Omicron variant began to impact our business in late December, mobility is already starting to bounce back, with gross bookings up 25% month-on-month in the most recent week," Khosrowshahi said in a statement.

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Uber's earnings release came shortly before the company's first-ever investor day, which was held in New York. Executives said that they would provide more details on their long-term strategy and how Uber could expand its current business.

Revenue

For the fourth quarter of 2021, Uber reported $5.8 billion in revenue.

EBITDA

The California-based company reported adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA), a measure that excludes one-time costs, primarily stock-based compensation, of $86 million for the quarter ended 31 December, significantly ahead of analyst expectations for $62 million.

That compared with a loss on the same basis of $454 million a year ago. It marked the company's second profitable quarter since it first reported positive adjusted EBITDA in the third quarter.

Delivery Unit

Uber's delivery unit, which is largely made up of its Uber Eats restaurant service, posted its first adjusted EBITDA profit of $25 million, showing Uber's ability to scale the once loss-making operation against strong competition.

Steady delivery bookings signal that the rebound in rides has not come at the expense of food delivery, with consumers sticking to the service even as the economy reopens.

Uber executives told investors on a conference call that the company was increasingly able to gain new customers for its Eats platform through its ride-hail business since the company merged its services into one app.

"Diversification Is Really Coming Into Play"

"The diversification is really coming into play," Khosrowshahi said, adding that its business remained resilient even during the Omicron wave thanks to delivery orders.

Restaurant Base In US Suburbs

Khosrowshahi said that the company had to improve its restaurant base in the US suburbs to catch up with larger delivery rival DoorDash DASH.N.

Strong Demand For Airport Trips

Rides recovery in the fourth quarter was driven by strong demand for airport trips, which tripled compared to last year. Airport rides are among the most profitable routes for Uber.

Net Income

Uber also posted net income of $892 million, as it revalued its stakes in Southeast-Asian Grab and self-driving company Aurora Innovation Inc AUR.O, just a quarter after it reported a $2.42 billion net loss driven by its stake in Chinese ride service Didi DIDI.N and stock-based compensation.

Marketing Spend

The company significantly increased its marketing spend in the fourth quarter, upping sales and marketing expenses by 36% on a quarterly basis. Uber launched several large Uber Eats advertising campaigns in the US market at the end of last year.

Adjusted Profit Forecast

Uber forecast lower-than-expected adjusted profit in the first three months of 2022, as the Omicron coronavirus variant dampened travel demand in January. Smaller US rival Lyft Inc LYFT.O issued a similar warning this month.

First-Quarter EBITDA Forecast

Uber forecast first-quarter adjusted EBITDA to be between $100 million and $130 million, compared with analysts' estimates for nearly $150 million.

News by Reuters, edited by Hospitality Ireland. Click subscribe to sign up for the Hospitality Ireland print edition.

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