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Uber Ridership Declines Further -- WSJ

08/07/2020 | 02:47am

By Preetika Rana

Uber Technologies Inc. posted another big loss with little sign of recovery in its core ride-hailing business as the coronavirus pandemic drags on.

Gross bookings for Uber's rides declined 75% year-over-year in the three months ended June 30, the San Francisco-based company said Thursday. With the entire second quarter affected by the Covid-19 outbreak, bookings fell 72% from the first quarter when the pandemic first struck.

Uber Chief Executive Dara Khosrowshahi on Thursday said business in Asia was bouncing back, with ride bookings in Hong Kong and New Zealand, where the pandemic has eased, "at times exceeding pre-Covid highs." While ridership is picking up in some lucrative cities including New York, where bookings more than doubled year-over-year, Mr. Khosrowshahi said bookings were down as much as 85% in some U.S. locations.

In May, he said there were early signs of recovery in ridership as some jurisdictions eased shelter-in-place measures, but the recovery stalled as Covid-19 infection numbers rose.

Uber's food-delivery business has been a bright spot during the pandemic, with people stuck at home. Bookings more than doubled year-over-year and advanced 49% over the first quarter.

"If restrictions continue or need to be reimposed, our delivery business will compensate," Mr. Khosrowshahi told analysts on an earnings call Thursday.

Mr. Khosrowshahi had vowed to make Uber profitable on an adjusted earnings before interest, taxes, depreciation and amortization basis before the end of the year. He withdrew that forecast in April, however, because of the health crisis. On Thursday, the company reaffirmed its hope to reach that milestone next year. Uber introduced a host of measures in May to save more than $1 billion in fixed costs, including far-reaching job cuts. The company booked $382 million in restructuring costs in the second quarter linked to its efforts to become leaner.

That charge contributed to Uber's $1.8 billion net loss, far smaller than the year ago period when one-time costs from its initial public offering drove its largest-ever three-month loss. Stripping out one-time costs, its second-quarter adjusted Ebitda loss widened to $837 million compared with a $656 million adjusted loss in the year-ago period.

Uber shares fell more than 3% in after-hours trading.

Total quarterly revenue fell 29% to $2.24 billion from $3.17 billion in the year-ago period. Overall gross bookings, including Uber's food-delivery business and other operations, declined 35% year-over-year to $10.22 billion. The results were broadly in line with Wall Street's already muted expectations. Analysts surveyed by FactSet had forecast revenue at $2.08 billion and gross bookings at $10.53 billion.

The rides segment, despite plummeting ridership, remained profitable on an adjusted basis, signaling the company's decision before the pandemic to focus on profitable growth after years of losses is showing results.

The Eats segment lost $232 million in the quarter on an adjusted basis in the cutthroat food-delivery market where profit has largely been elusive. Uber has tried to trim those losses, and the second-quarter results were the best three-month performance for its Eats business.

Last month, Uber agreed to acquire rival Postmates Inc. in a tie-up that would allow the company to find savings amid the costly work of building out a delivery empire and to compete with deep-pocketed rivals. The $2.65 billion all-stock deal is expected to close next year. Uber was vying to buy Grubhub Inc., but was beat out by Dutch food-delivery giant Just Eat Takeaway.com NV in a $7 billion deal.

Falling ridership during the pandemic and fierce competition in its food-delivery business aren't Uber's only headaches. Regulators also have Uber and other so-called gig-economy companies in their crosshairs for allegedly misclassifying their workers as independent contractors instead of employees.

On Wednesday, California's Labor Commission said it was suing Uber and rival Lyft Inc. for misclassifying their drivers in that way. The state's new gig-economy law, which took effect Jan. 1, seeks to force the companies to classify drivers as employees, making them eligible for benefits such as paid sick leave and health insurance -- issues that became front-and-center during the pandemic.

Uber and Lyft have said their drivers are properly classified under the law. Still, the ride-hailing companies have joined other startups that rely on gig workers and raised more than $110 million to back a ballot initiative for November, asking that voters exempt them from the law.

Uber and other companies, under the proposal, would guarantee health-care subsidies and other benefits to drivers who work over a certain number of hours a week. Mr. Khosrowshahi said on Thursday's call that the most Uber drivers don't want to become employees.

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


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