Business

Uber exceeds 3rd-quarter revenue estimates but misses targets for users

Uber beat Wall Street estimates for third-quarter revenue, as more people used its ride-hailing and Uber Eats restaurant delivery service.

Ride-hailing company still posting overall losses but is expanding into new areas

An Uber pickup location is pictured in San Diego, Calif., on Sept. 30. (Mike Blake/Reuters)

Uber Technologies beat Wall Street estimates for third-quarter revenue Monday, as more people used its ride-hailing and Uber Eats restaurant delivery service. But at the same time, it missed estimates for monthly users.

Still, Uber's CEO says he expects the company will be profitable in about two years.

Dara Khosrowshahi told reporters Monday that the company's goal is to reach profitability — when adjusted for interest, taxes, depreciation and amortization — for the full year of 2021.

"While we will of course continue to invest in growth and the power of our platform, especially in some of our newer, high-potential businesses like [Uber] Eats, we will continue to be thoughtful stewards of capital, make tough decisions where necessary, and make any dollar investment count," Khosrowshahi said.

Shares of Uber are expected to be under pressure on Wednesday, when a restriction on selling stock lifts, allowing major shareholders, including company executives and investors, to sell their shares. Some analysts expect more than 80 per cent of the company's outstanding shares will become eligible for sale.

"There could be an avalanche of selling as insiders and early private investors head for the exits," said Dan Ives, managing director at Wedbush Securities.

Uber and rival Lyft still posting losses

Total revenue rose nearly 30 per cent to $3.81 billion US, beating analysts' average estimate of $3.69 billion, according to IBES data from Refinitiv.

Uber's costs jumped about 33 per cent to $4.92 billion in the reported quarter. Gross bookings, a measure of total value of rides before driver costs and other expenses, rose 29.4 per cent from a year earlier to $16.47 billion.

The company and its smaller rival, Lyft Inc, which are still taking losses, have historically relied on heavy subsidies to attract riders. The companies are also spending to expand into newer areas.

Lyft's results last week soothed some worries as the ride-hailing company posted better-than-expected third-quarter revenue and an improved outlook showed it was well on its way to profitability by the end of 2021.

Push to pay drivers more

But both companies are facing potentially higher costs for paying drivers. In September, California passed a law requiring ride-hailing drivers to be classified as employees, which could entitle them to minimum wage, benefits and workers compensation. In response, Uber and Lyft proposed a ballot initiative aiming to exempt their companies from the new law.

"We think that there's a better answer out there," Khosrowshahi said. California's new law was figured into Uber's future profitability prediction, and Uber is already operating within similar laws in states such as Massachusetts, New Jersey and Connecticut, he said.

California represents 9 per cent of Uber's global rides and Eats bookings, Khosrowshahi said.

In New York City, where regulations forced ride-hailing companies to increase prices, it "definitely hurt volumes in the outer boroughs where people need transportation the most," Khosrowshahi said. But despite raising prices in some markets, frequency of use of Uber's services is increasing, he said.

This file photo shows the Uber Eats app on an iPhone. (Charles Rex Arbogast/The Associated Press)

Revenue from Uber's ride-hailing business rose about 19 per cent to $2.90 billion while sales from its Uber Eats segment rose 64 per cent.

The company said its monthly active platform users rose to 103 million globally in the third quarter, from 82 million a year earlier, but fell short of analysts' estimates of 105.5 million, according to IBES data from Refinitiv

Net loss attributable to the company widened to $1.16 billion, in the quarter ended Sept. 30, from $986 million a year earlier.

On a per share basis, net loss attributable to the company's stockholders narrowed to 68 cents per share from $2.21 per share.