By Levi Sumagaysay
Uber Technologies Inc.’s business continued to recover in the first quarter as COVID-19 restrictions eased, and the sale of its self-driving unit helped produce the smallest quarterly loss in its history as a public company.
Uber (NYS:UBER) reported that gross bookings reached a record high, ride volume improved and delivery was still on a tear, but the company’s shares seesawed after hours, rising about 2% in after-hours trading Wednesday before falling as much as 4.75% right after the earnings call started. Shares fell 3.8% in the regular session to close at $51.18.
“Uber is starting to fire on all cylinders, as more consumers are riding with us again while continuing to use our expanding delivery offerings,” Chief Executive Dara Khosrowshahi said in a statement.
Once again, delivery outdid ride-hailing, with delivery gross bookings growing 166% year over year while mobility (rides) bookings, which are improving, declined 38% from the year-ago quarter.
A key point Chief Financial Officer Nelson Chai made on the earnings call with analysts: The company is seeing no signs of its delivery business suffering as the effects of the pandemic ease. “We’re seeing encouraging signs of continued use in our delivery business, even as cities reopen,” he said.
Regulations were front and center on the call. Executives faced many questions about worker classification, especially after U.S. Labor Secretary Marty Walsh’s comments last week that in “a lot of cases,” gig workers should be classified as employees. Shares of Uber, Lyft and other gig companies sank immediately after those comments.
See: Here’s how gig work could change under Biden’s Labor secretary
Tony West, Uber’s chief legal officer, said on the call Wednesday that there are differing views on the issue within President Joe Biden’s administration.
“That creates space for meaningful dialogue,” West said, pointing to Walsh’s comments that his department would engage in talks with the gig companies. “Our position is very much consistent with the end goals of regulators… that we’re giving drivers protections they need while maintaining their flexibility.”
In March, the company said it would provide its U.K. drivers with a minimum wage and other benefits to comply with a court ruling there. That was reflected in a $600 million accrual the company recorded for the first quarter, though the company has said that it is mostly passing on the costs of new driver benefits to consumers.
On regulatory concerns, “the question is, are we on the fast track to rising labor costs that we weren’t on during the prior administration?” said Tom White, analyst with D.A. Davidson.
Uber’s CEO also reiterated during the call that driver supply continues to outstrip demand, saying that drivers concerned about their safety are preferring to deliver for Uber Eats as opposed to drive other people in their vehicles. Because of that, driver earnings in big markets are in the $30-an-hour range, he said. Khosrowshahi also said he expected driver supply to return to normal in the third quarter and beyond, as more people are vaccinated.
See: Uber spending $250 million to lure drivers back to work
Chai said on the call that he expects the company to reach adjusted Ebitda profitability by the end of the year: “We feel really good about where we are.”
The San Francisco-based company reported a net loss of $108 million, or 6 cents a share, compared with a loss of $2.9 billion, or 1.06 a share, in the year-ago period. Its net loss benefited from a $1.6 billion gain from divesting ATG, its autonomous vehicle business, Uber disclosed in a filing with the Securities and Exchange Commission. Adjusted Ebitda loss was $359 million, and revenue fell to $2.9 billion from $3.25 billion in the year-ago quarter.
Analysts surveyed by FactSet on average had forecast a loss of 56 cents a share on revenue of $3.27 billion. Uber’s lowest quarterly loss as a public company until Wednesday was $887 million in the fourth quarter of 2018, according to FactSet records.
Gross bookings rose 24% year over year to a record $19.5 billion, an all-time high. Analysts had expected $18.08 billion. Delivery gross bookings climbed to $12.5 billion, beating analysts’ expectations of $10.97 billion. Mobility gross bookings fell to $6.8 billion year over year, while analysts expected $7.17 billion.
The aforementioned regulatory concerns have weighed on gig companies’ stock lately. Shares of Uber are up less than 0.5% year to date, and about 84% in the past 52 weeks, compared with Lyft Inc.’s (NAS:LYFT) stock, which has risen about 8% so far this year and about 102% in the past year. Lyft reported first-quarter earnings Tuesday.