Uber says first adjusted profit possible this quarter2 min read . Updated: 21 Sep 2021, 06:17 PM IST
- The ride-hailing giant would follow Lyft in reaching that milestone, which would come months earlier than Uber had projected
Uber Technologies Inc. said it could reach a measure of profitability in the current quarter, months earlier than previously expected, in what would be the ride-hailing giant’s first adjusted earnings since its inception more than a decade ago.
Uber projects an adjusted profit before interest, taxes, depreciation and other costs between a loss of $25 million and a profit of $25 million in the quarter that ends Sept. 30, according to a securities filing Tuesday. Previously, it expected to post a loss of under $100 million by that measure in the current quarter.
Uber also said Tuesday that it expects to post an adjusted profit in this year’s fourth quarter.
Uber’s disclosure comes after Lyft Inc. posted its first profit on the same basis in this year’s second quarter, and food-delivery rival DoorDash Inc. surpassed the ride-hailing giant’s market capitalization last week. Uber’s stock this year through Monday’s close is down more than 22%.
Uber and Lyft have been under pressure to turn a profit after years of losses. One-time gains from certain investments and divestitures have led Uber to post a rare net profit in the past. But Uber and Lyft have yet to turn a net profit on the strength of their operations and haven’t projected when they might.
Instead, both companies have pointed to adjusted metrics to signal progress toward profit. These adjustments entail stripping out expenses such as asset write-downs, gains from investments and stock-based compensation that executives and many investors consider to be outside a company’s fundamental operations.
Uber and Lyft began trimming their losses before the pandemic, phasing out deep discounts to customers in an attempt to prove they could grow without subsidizing rides. Then the Covid-19 crisis forced an overhaul, resulting in the sale of each of their self-driving divisions—a costly undertaking—and big layoffs.
The cost cuts, combined with a recent uptick in the companies’ core rides businesses—initially crushed by the pandemic—helped Uber and Lyft move toward a measure of profitability sooner than initially projected. Now investors will watch to see how long the companies can sustain it. Lyft has said it expects to post an adjusted full-year profit this year.
“They say that crisis breeds opportunity, and that’s certainly been true of Uber during the last 18 months," Chief Executive Officer Dara Khosrowshahi said in Tuesday’s securities filing.
Uber’s food-delivery business, though capital-intensive, has been a bright spot during the pandemic. Uber’s Eats business surpassed its ride bookings during the pandemic, and the company has trimmed the unit’s losses over the past year.
Near-term challenges remain. Uber and food-delivery competitors are embroiled in a legal battle with some of their most lucrative U.S. cities over how restaurants and consumers should be charged after the pandemic prompted a huge shift to their platforms. The outcomes of those battles could hurt already thin delivery margins.
Uber and Lyft are also confronting a labor shortage, as demand for rides recovers faster than the availability of drivers. The companies pumped in millions of dollars to give drivers incentive to return, a short-term fix that helped alleviate the shortage in some areas, but must find ways to keep drivers once the bonuses are gone.
This story has been published from a wire agency feed without modifications to the text
Never miss a story! Stay connected and informed with Mint. Download our App Now!!