Uber returns to profitability on continued demand for rides and delivery

The company posted a higher-than-expected profit of $1.02 billion in the three months through June, which included a $333 million benefit from its equity investments as well as income from its operations. Analysts had expected it to post a profit of $654 million.

Uber posted its first annual profit as a public company last year, a milestone that marked the end of an era in which companies spent big and posted hefty losses in an attempt to grab market share. But the company slipped into a loss in the first three months of this year, as losses from its equity investments and legal settlements hit its bottom line even as its underlying operations stayed profitable.

A sharp selloff in stocks could weigh on Uber’s equity investments, propelling it into another loss in the coming months, though the company said it expects sales to grow and its underlying operations to remain profitable in the current quarter.

Uber said it expects the total value of transactions on its app—or gross bookings—to come in between $40.25 billion to $41.75 billion in the current quarter. Analysts polled by FactSet were expecting $41.18 billion. The company expects adjusted earnings between $1.58 billion and $1.68 billion, compared with analysts’ estimate of $1.63 billion. That number strips out the impact of equity investments and several other costs to underscore the strength of a company’s underlying operations.

Uber’s gross bookings grew in the second quarter by 19% year-over-year to $39.95 billion, slightly above analysts’ expectations. Ride bookings rose 23% while delivery bookings grew 16%.

Revenue, or Uber’s cut from those bookings, expanded 16% to $10.7 billion, also slightly above expectations.

Prices for Uber’s rides and deliveries have increased as the company has pivoted to profitability, helping its revenue. Uber has also made a big push into in-app advertising, a high-margin business. Its ad revenue exceeded a run rate of $1 billion last quarter.

Hailing Ubers and ordering in has become normalized for many consumers even though it isn’t as cheap anymore. Analysts are waiting to see the margins Uber and its peers can sustain as the industry matures.

Getting here has been a bumpy ride. Uber has cut back on deep discounts and abandoned expensive moonshots. It cut thousands of jobs during the pandemic and shelved ambitious plans to develop self-driving technology. The belt-tightening continued through last year, with smaller cuts in its freight and delivery businesses.

The company overcame a big regulatory hurdle last month when California’s Supreme Court preserved Uber and other gig-labor-dependent companies’ independent-contractor models in the state. In June, Uber reached a settlement with the attorney general of Massachusetts that promised workers a minimum wage alongside some benefits.

Some regulatory challenges loom for Uber’s food-delivery unit. New York City and Seattle recently adopted new laws aimed at raising driver pay, leading Uber Eats to charge new fees to consumers to make up for additional costs.

Up through Monday’s close, Uber’s shares had risen 29% over the previous 12 months. The tech-heavy Nasdaq Composite Index rose 16% over the same period.

Write to Preetika Rana at preetika.rana@wsj.com