On Thursday, Uber Technologies reported its first profitable quarter since the company launched in San Francisco way back in 2009. This represents a huge achievement for the company, which has been investing heavily to expand the business in the hopes that it will eventually become the world’s favored ride-hailing, courier, and food-delivery service.
But here’s the rub. Uber is technically only profitable on an adjusted basis that takes a pretty narrow view of its finances. Despite this, it’s still a step in the right direction and may foreshadow the reliable earnings the company has been seeking for ages.
Concerns persist, however. Uber has needed to assuage investor fears regarding driver shortages, saying that the business would increase spending to incentivize people to get back on the road. The company has already dropped $250 million toward the cause, padding out its ranks by 640,000 since the start of 2021. So it’s unclear how much more money it wants to put toward luring new drivers. But Reuters reported that this strategy wouldn’t even be deployed until after the business felt the pandemic was thoroughly in rearview, adding that it wasn’t the only issue Uber needed to address.
But a massive drop in the value of its stake in Chinese ridehailing company Didi drove a $2.4 billion net loss in the third quarter, and Wall Street viewed Uber’s fourth-quarter forecast as disappointing. Shares bounced in after-hours trade and were up about 1 [percent] as Uber briefed Wall Street in a call.
The California-based company reported adjusted earnings before interest, taxes, depreciation and amortization, a measure that excludes one-time costs such as stock-based compensation, of $8 million for the quarter ended Sept. 30. That compared to a loss on the same basis of $625 million a year ago.
Uber forecast an adjusted profit of $25 million to $75 million for the last quarter of 2021. Analysts on average expected $114 million, according to Refinitiv data.
Despite the adjusted profit, Uber’s earnings report came as a disappointment after smaller U.S. rival Lyft Inc on Tuesday reported its second consecutive quarterly adjusted profit at $67.3 million and said it expected adjusted EBITDA of between $70 million and $75 million in the fourth quarter.
Neither Uber nor Lyft are profitable on a net basis and nobody is sure when that might happen, regardless of whether they’re working within the company or analyzing it from the outside.
That said, Uber is trading higher today than it was at the start of the month and this has been attributed to the strength of its food-delivery services. For the quarter, reported revenue of $4.8 billion, which is up 72 percent from a year ago and above the forecasted of $4.4 billion. Gross bookings were $23.1 billion, which is 57 percent more than a year ago, and right within with the company’s recent guidance of $22.8 billion to $23.2 billion.
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