An Uber driver in Vancouver in January. The ride-hailing company is reporting a wider loss as the coronavirus pandemic forces people to stay at home.
Photo: Darryl Dyck/The Canadian Press/Associated PressUber Technologies Inc. chief Dara Khosrowshahi mapped a revised path to profitability, after the coronavirus pandemic undermined ridership for the company resulting in a larger first-quarter loss.
Mr. Khosrowshahi said Thursday that Uber plans $1 billion in fixed-cost cuts, including reducing marketing spending, deferring capital expenditures and the decision announced earlier this week to cut 14% of staff. “Reaching profitability as soon as possible remains a strategic priority for us. We believe the disruption caused by Covid-19 will impact our time line by a matter of quarters and not years,” the CEO told analysts on a conference call.
Those measures could put the ride-hailing company in a position to be profitable in 2021, Chief Financial Officer Nelson Chai said on the call. Uber previously targeted the milestone this year on an adjusted basis before interest, taxes, depreciation and amortization, before withdrawing guidance last month because of the sharp drop in demand caused by the health crisis.
Uber shares, up more than 11% on the day, were ahead 8% in aftermarket trading.
Smaller rival Lyft Inc., which also has said it plans to cut staff and shelved its profitability target, on Wednesday, said its cost-cutting efforts would lower expenses $300 million this year and make it easier for the company to reach profitability once ridership recovers. “The actual timing,” Chief Financial Officer Brian Roberts said, “will depend on the speed of the recovery. It could be earlier or later.”
Uber and Lyft both said they have seen a small recovery in ridership in recent weeks since demand plummeted mid-March as shelter-in-place restrictions were imposed across much of the U.S. to stem the coronavirus outbreak.
Uber reported a net loss of $2.94 billion on sales of $3.54 billion in the three months ended March 31, compared with a net loss of $1.09 billion and sales of $3.1 billion a year earlier. The larger loss includes $2.1 billion in pretax write-downs on some of Uber’s investments that have lost value because of the crisis. Analysts surveyed by FactSet had expected a $1.38 billion net loss on sales of $3.53 billion for the quarter just ended.
San Francisco-based Uber and Lyft have seen the number of riders using their service plummet since lockdowns took effect across much of the U.S. and in cities globally, and both are responding with cost cuts. Lyft has said it plans to trim about 17% of its staff.
Uber’s earnings for the latest quarter provide only a glimpse of the financial hit from the pandemic. Demand in the U.S. started to drop precipitously from the Covid-19 outbreak around mid-March. Uber said the number of trips in the first quarter was up 7% year-over-year, but fell 13% from the prior three-month period. One bright spot was Eats, Uber’s food-delivery business. That unit has boomed as people stuck at home have relied on such services to get meals from some of their favorite restaurants.
Eats gross bookings surged 52% to $4.68 billion in the first quarter over the year prior and were up 7% compared with the last three months of 2019.
“While our rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet, focus additional resources on Uber Eats, and prepare us for any recovery scenario,” Mr. Khosrowshahi said in a statement.
Lyft, which reported earnings on Wednesday and doesn’t offer food delivery, said ridership fell 75% in April and has barely recovered. “Even as shelter-in-place orders and travel restrictions are modified or lifted, we anticipate that continued social distancing, altered consumer behavior and expected corporate cost cutting will be significant headwinds for Lyft,” Chief Executive Logan Green told analysts.
Uber on Wednesday said it was cutting about 3,700 workers and that Mr. Khosrowshahi agreed to waive his base salary for the rest of the year. “We are continuing to look at all levers to ensure our core rides and Eats businesses emerge from this crisis stronger than ever,” Mr., Chai, the finance chief, said in the statement Thursday.
The company suspended its full-year guidance last month, including the goal of being profitable on an adjusted basis before interest, taxes, depreciation and amortization by the end of this year. Uber posted a $612 million first-quarter loss on that basis, which excludes costs linked to its Covid-19 response.
Uber said its response to the viral outbreak, which included measures such as offering health-care workers free rides and providing protective gear to drivers, took $19 million from its top line and added $5 million in costs.
Despite the difficult period, Uber is continuing to invest in ride-sharing activities. The company led a $170 million funding round in electric-scooter rental startup Lime, which had its own round of job cuts last month. Lime, in a statement Thursday, said that as part of the transaction it was buying Uber’s electric-scooter unit Jump.
Uber contributed $85 million to the round as part of a deal that includes an ability to acquire 100% of Lime in two years, according to a person familiar with the terms. The Lime service will be integrated into the Uber app. It also allows Uber to cut its own bike and service operations, which make up much of the company’s other bets segment. In the first quarter, that segment reported a $63 million adjusted operating loss, compared with a $42 million loss a year earlier.
Lyft’s CEO said Wednesday that in the wake of the pandemic, consumers may prefer scooters, bikes and ride services over public transport.
Beyond the current economic slowdown, Uber and Lyft also face pressure from regulators and lawmakers for classifying their drivers as contract workers rather than employees. On Tuesday, California sued the companies, citing the state’s gig-economy law that took effect Jan. 1, saying their treatment of drivers deprives them of rights such as paid sick leave and unemployment insurance—issues made more visible during the pandemic.
—Tim Higgins contributed to this article.
Write to Robert Wall at robert.wall@wsj.com
Copyright ©2020 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
"impact" - Google News
May 08, 2020 at 04:49AM
https://ift.tt/2WdxlvK
Uber’s First-Quarter Loss Balloons on Coronavirus Impact - The Wall Street Journal
"impact" - Google News
https://ift.tt/2RIFll8
https://ift.tt/3fk35XJ
Bagikan Berita Ini
0 Response to "Uber’s First-Quarter Loss Balloons on Coronavirus Impact - The Wall Street Journal"
Post a Comment