- During the first quarter of 2020 Uber had a loss of $2.9 billion, the largest loss during three-quarters. The company had already posted revenue of $3.54 billion.
During the first quarter of 2020 Uber had a loss of $2.9 billion, the largest loss during three-quarters. The company had already posted revenue of $3.54 billion. Gross reservations in its ride-hailing business fell 3 percent, while reservations in its Uber Eats division rose more than 54 percent year-over-year due to increased demand for food deliveries.
Owing to the pandemic, Uber’s ride-hailing service collapsed as a result of widespread shutdown orders. This week, the company announced it would lay off 3,700 full-time workers, or around 14 percent of its workforce. Another 400 + employees from Uber’s Jump Bike and Scooter division will also be laid off as part of an investment agreement with Lime.
Uber’s riding-hailing business is down 80 percent, Dara Khosrowshahi, CEO of the firm, said in a call with investors. “I am not going to sugarcoat that,” he said. “COVID-19 has had a drastic effect on [Uber’s] [business] trips.” However, Khosrowshahi said, the trip volume is coming back, although slowly.
“All green shoots push a subdued optimism,” he said. “Over the past three weeks, we have seen week-on-week growth globally. This week is tracking to be our fourth consecutive week of progress. “Also, Uber’s main competitor, Lyft, said the company had come back gradually over the past few weeks.
Yet, in Uber’s attempt to be competitive by the end of the year, the pandemic had thrown a wrench. The company’s net loss of $2.9 billion for the quarter was a 163 percent raise over the previous year. Gross reservation, or overall customer payments to Uber before driver payments and other fees or discounts, dropped 14.5 percent from the previous quarter.
Uber Eats is an obvious bright spot for the group, but thanks to regulatory pressure and rivalry from other players like GrubHub and DoorDash, even that is under strain. Uber Eats has seen an acceleration in demand since mid-March, with growth in gross bookings in April excluding India at 89 percent year-over-year, Khosrowshahi said. Meanwhile, Uber recently shut down its Eats business in eight unprofitable markets for the brand. Now, the company is optimistic about its food supply sector increasing.
“There has been a huge rise in restaurant sign-ups leading to rapid range changes in major markets such as the US, as well as behavioral shifts,” said Khosrowshahi. “We believe these trends are here to stay and will result in the whole category expanding.”
Naturally, the issues with Uber pre-date the coronavirus crisis. The company has been under pressure from investors to curb its massive losses and show how a profit will begin to be reported. Uber and Lyft, who both went public in 2019, set records for the amount of money lost to their respective IPOs in the run-up. And both companies have continued to lose money since going public, raising concerns about the long-term viability of app-based ride-hailing as a company. Last year Uber had to lay off about 1,000 employees amid restructuring efforts.
The company is also under increased regulatory scrutiny. Uber was recently sued, along with Lyft, by California’s attorney general for failing to comply with the state’s groundbreaking new gig work law that makes it harder for the company to classify drivers as independent contractors. It also lost its license in London after regulators identified a “pattern of failures.”