BENGALURU: Food delivery platform, UberEats India, which was recently acquired by restaurant aggregator, Zomato, on Friday posted a loss of $24 million for the first quarter of 2020 as total expenses surged to $19 million, as per filings with the US Securities and Exchange Commission (SEC).
UberEats reports earnings on a calendar year basis.
Uber Technologies Inc had divested its food delivery business in India, selling the controlling stake to Zomato in March. The deal also included UberEats picking up a 10% stake in Zomato. Apart from India, Uber exited at least eight food delivery markets in the last few quarters, as the publicly-traded company is expected to breakeven by 2021, as per filings.
UberEats India had reported higher expenses of $99 million in the same quarter last year (Q1 2019), which included marketing costs of $28 million. By Q4 2019, marketing costs went down by 60% as the food delivery platform began slashing discounts and entered into talks with rival Zomato for a merger.
UberEats India also reported negative revenues of $5 million for the March quarter, and negative revenues of $4 million for the previous quarter Q4 2019, indicating cash revenues transferrable to Zomato under the merger deal.
The number of daily trips completed by UberEats riders in India fell to 5 million in Q1, compared to a higher 38 million rides in the same quarter last year, suggesting that demand for UberEats had fallen drastically despite heavy discounting. The number of monthly active customers on UberEats India also declined to 1 million in the March quarter compared to 3 million monthly active users in the corresponding quarter in 2019.
In the reporting quarter, Uber initiated layoffs across the US, West Asia and in India, as number of rides fell by 13% sequentially to 1.65 billion in Q1.
Uber’s chief executive officer (CEO), Dara Khosrowshahi, said in a conference call on Friday that the company has already planned expenditure cutbacks worth $1 billion due to business disruptions caused by covid-19.
“Yesterday, consistent with lower trip volumes in our hiring freeze, we announced a reduction in our customer support and recruiting teams by more than 3,700 employees…Reaching profitability as soon as possible remains a strategic priority for us. We believe the disruption caused by covid-19 will impact our timeline, but by a matter of quarters and not years," Khosrowshahi added during the earnings call.
He also pointed out that the company has turned focus on food delivery business since the number of cab trips has dropped sharply with people staying at home. Overall, Uber’s gross bookings, which include dollar revenue, taxes, tolls, and fees, stood at $15.8 billion in Q1 2020, a 13% quarter-on-quarter decline compared to Q4 2019.
Even though Uber’s gross bookings fell, the company’s overall food delivery business grew by 54% year-on-year (YoY) . In the March quarter, UberEats reported gross bookings of $4.6 billion, while the core ride-hailing business saw gross bookings of $10.87 billion.
Uber’s overall Q1 2020 revenue rose 14% YoY to $3.54 billion, which largely came from a surge in orders from UberEats business. The company’s net loss widened to $2.9 billion in the reporting quarter, a 163% increase compared to $1.1 billion in losses reported in the first quarter of 2019.