The delivery business of Uber Technologies (NYSE: UBER) is on track to be profitable on an EBITDA basis by the end of the year, according to company officials speaking on the Uber earnings conference call.
Uber’s Delivery segment is coming off a quarter during which it had record gross bookings. On top of that, the company also reported it had record gross bookings for April and for the most recent week.
The Delivery business reported gross bookings of $12.5 billion for the quarter. That was 24% higher sequentially than the fourth quarter of 2020, and was up 166% year on year over the first quarter of 2020.
The Delivery business had a $52 billion annualized run rate in gross bookings in April, CEO Dara Khosrowshahi said on the call.
Khosrowshahi said the nations where Uber Delivery is profitable — they were not specified — generated more than $135 million in EBITDA on gross bookings of slightly more than $300 billion. Those EBITDA earnings allow the company to put new investment into the Delivery business.
“We remain on track to be EBITDA breakeven by year-end,” Khosrowshahi said.
The company’s GAAP earnings per share of negative 6 cents was better than forecasts by 49 cents per share, according to SeekingAlpha. It was also significantly better than the GAAP loss of $1.70 in the first quarter of last year.
But total revenue of $2.9 billion was off consensus forecasts by $280 million.
On other metrics, total gross bookings of $19.53 billion was more than consensus of $18.04 billion. Trips taken were 1.45 billion, versus a consensus of 1.546 billion. The number of users active on the platform was 98 million versus a consensus of 100.6 million.
The report was considered bearish by post-close investors. At approximately 6:15 p.m. EDT, Uber’s stock price was down $2.30 from the day’s close of $51.18, a drop of 4.63%.
In discussing Uber Freight, the company said the segment’s revenue was up 51% year on year, and 55% if the divested European division is not counted. EBITDA rose to a negative $29 million from negative $64 million in the last quarter at Uber Freight, a margin gain of 2,250 basis points. But the company also said Uber Freight’s EBITDA margins were up 340 bps from the fourth quarter of the year.
Uber’s earnings since the pandemic have been looked upon as a barometer of economic activity, with Delivery under the former Uber Eats banner soaring last year when people had more food delivered into their homes, and Uber Mobility, the ride-sharing service, plummeted as people stayed home.
Mobility gross bookings were down 38% year over year, while its revenue from those bookings were down 65% from last year. But Delivery’s revenue, with Postmates now part of the company, was up 230% on that 166% rise in gross bookings.
Mobility had positive EBITDA of $298 million, a 49% decline from the $581 million last year. For the company as a whole, corporate EBITDA strengthened to negative $359 million from negative $612 million last year.
In the U.S., Kohshrowshahi said Uber is having the same difficulties as a lot of transportation companies: finding drivers.
But the opportunities for solid earnings are there, he said. “With demand outstripping supply, driver earnings are historically elevated,” he said.
Drivers are making about $37 per hour in New York City and slightly less than that in Chicago. Khosrowshahi noted that those figures are only from Uber drivers and given that many rideshare drivers will also work for others services, the hourly rate the drivers are taking home could be more than that.
Khosrowshahi said demand for the company’s services is coming back like a “fast twitch muscle,” while the supply of drivers is coming back like a “slow twitch.” But the return and recruitment of new drivers is slower at Mobility than Delivery, Khosrowshahi said, because the “hurdles” for a person to be accepted as a Mobility driver are higher than that for Delivery.
Additionally, some Mobility drivers from the past have lingering safety concerns because of COVID-19, he said.
Given the comments last week made by Secretary of Labor Marty Walsh on the issue of independent contractors, Tony West, Uber’s chief legal officer, was asked about how federal policy might impact Uber.
The company is coming off a major victory on the issue of employee vs. independent contractor status with the victory of Prop 22 in California last Election Day, which enabled Uber and other delivery companies to keep their independent contractor model.
West was mostly positive but nonspecific. He said that while “people have different views,” those differences “create space for dialogue.”
That dialogue can lead to “a solution that will give gig workers the protection they deserve while giving them the flexibility they desire.”
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