Uber reports record revenue, but delivery takes a back seat

It looks like rideshare is back in the driver’s seat for Uber (NYSE: UBER) after Eats and its delivery business steered the company through the pandemic.

The company reported a record $8.1 billion in revenue for the second quarter of 2022, up 33% from a year ago, due largely to growth in its mobility business. More drivers (5 million) and customers (122 million per month) used Uber’s platform in Q2 than ever before, which helped it offset losses from its investments in Aurora, Grab and Zomato.

In another milestone, the company’s free cash flow reached $382 million, the first time that quarterly figure has ever been positive. That, in essence, means that Uber made more from its business operations than it lost. The company’s stock popped 12% in premarket trading on Tuesday as investors took kindly to the news.

“I challenged the team to meet our profitability commitments even faster than planned, and the team delivered,” said Uber CEO Dara Khosrowshahi in prepared remarks.

Uber’s loss per share came in at $1.33, below consensus estimates of a 47-cent loss. Losses included $1.7 billion from investments in other rideshare and food delivery services, but the company actually beat analyst expectations on revenue by $700 million. 

That helped drive adjusted earnings before interest, taxes, depreciation and amortization of $364 million, topping Uber’s high-end guidance for the quarter. It’s also an increase of roughly $873 million year over year (y/y).

Gross bookings reached a record $29.1 billion, up 33% y/y. Trips were up 24% y/y to 1.87 billion — that’s also 12% higher than in 2019, before the pandemic. At the same time, drivers and couriers earned $10.8 billion on the platform during the quarter, jumping 37% y/y and actually outpacing gross bookings by 33%.

Delivery dethroned

During 2020 and 2021, Uber Eats and the company’s delivery business outpaced the revenue it earned from rideshare and mobility, even becoming profitable on its own. Things flipped in Q1 2022 — delivery continued to post profits, but the mobility segment played a bigger role in profitability.

That trend continued into Q2 as delivery again lagged mobility. Delivery gross bookings of $13.9 billion were up 7% y/y, but mobility gross bookings rose 55% during the same stretch. Revenue for the segment came in at $2.7 billion, up 37% from a year ago, but that’s still a far cry from the 120% y/y growth mobility experienced.

Meanwhile, delivery basket sizes, order frequency and monthly active platform customers rose 3%, 2% and 1% y/y, respectively. All three metrics remained stable on a quarterly basis. Active merchants grew 12% y/y, while active couriers grew 19%, including 53% in the U.S. In total, the delivery segment accounted for adjusted EBITDA of $99 million, up $260 million from Q2 2021.

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“We plan to continue to deliver strong delivery incremental margins and significantly higher absolute EBITDA levels for the balance of the year,” Khosrowshahi predicted. “We are currently witnessing slower category growth and ongoing FX [foreign exchange] headwinds, but we won’t chase growth for growth’s sake. We remain confident that delivery has a significant growth runway for many years to come, as on-demand delivery becomes the standard for consumers.”

Despite mobility’s ascent, Uber continued to invest in delivery. In May, it expanded its grocery delivery partnership with nationwide grocer Albertsons to 2,000 stores, also adding partnerships with Tesco and One Stop in the U.K.

The company this month rolled out a comprehensive update to its grocery delivery service, adding the ability for customers to order from stores even after they’re closed. And in June, it introduced a Nationwide Shopping feature that allows customers anywhere in the country to order from restaurants in New York, Los Angeles and Miami.

Watch: How will Uber Freight’s newest acquisition help push things forward?

“Even as we expand delivery profitability, we invested strategically in New Verticals like grocery, convenience and alcohol, which we believe can be profitable and will strengthen the value of our platform over time,” said Khosrowshahi.

Outside of delivery, Uber also announced Tuesday that its drivers would now be able to view fares before accepting trips, a feature that has been long-requested on the mobility side. They’ll also now see several trip offers at once — typically, each driver is offered only one at a time.

According to Uber’s internal projections, the company is just getting started this year. It anticipates gross bookings for the third quarter to land between $29 billion and $30 billion, which would represent another all-time high. It also expects adjusted EBITDA in the range of $440 million to $470 million.

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Source: freightwaves - Uber reports record revenue, but delivery takes a back seat
Editor: Jack Daleo