Uber (UBER) reported first quarter earnings that largely beat Wall Street estimates, but the ride hailing giant’s losses widened to nearly $3 billion, as the coronavirus crisis forced the company to spend more on incentives designed to encourage consumers to use its services.
Despite a surprise jump in bookings and revenue in the face of the coronavirus pandemic that’s ricocheting across Corporate America and the global economy, Uber’s stock tumbled by around 2% in after-hours trading as analysts honed in on the company’s inability to turn a profit.
Here’s how the company performed in the quarter compared to analysts' expectations.
Gross bookings: $15.78 billion versus $15.27 billion expected.
Rides gross bookings: 10.87 billion versus $10.68 billion expected.
Eats gross bookings: $4.68 billion versus $4.32 billion expected.
Losses per share: $1.70 versus $0.99 expected.
The company posted a net loss of nearly $3 billion, even as bookings outperformed and ride-sharing saw an 8% year-over-year increase.
“While our Rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet, focus additional resources on Uber Eats, and prepare us for any recovery scenario,” CEO Dara Khosrowshahi said in a statement.
In April, Uber pulled its full year guidance, citing the pandemic's impact on the business.
Uber's earnings announcement follows news that it will cut roughly 14% of its workforce, or 3,700 jobs, primarily in its customer support and recruiting divisions. Uber's chief rival, Lyft (LYFT), also announced it was cutting its workforce roughly 17%, or 982 jobs, and furloughing another 288 employees.
Unlike Lyft, Uber has its Eats platform to fall back on, as ride-share customers plummet amid lockdowns. Drivers unable to make enough money with ride-sharing alone have increasingly turned toward the Eats arm to make up for losses in earnings — which may also help the company, as house-bound consumers order takeout meals.
“Along with the surge in food delivery, we are encouraged by the early signs we are seeing in markets that are beginning to open back up,” Khosrowshahi said. “Our global footprint and highly variable cost structure remain an important advantage, as our expectation is that the Rides recovery will vary by city and country.”
Uber's Q1 results only offer a small look at the full impact of the pandemic on the company, though. With lockdowns in the U.S. only going into effect in March, the firm's Q2 report will provide a fuller understanding of how badly the business has been clobbered by a loss of ridership.
"Uber and Lyft will likely face their peak ride share challenges in [the second quarter], though we expect Uber to be hit harder initially due to its international exposure," Wedbush analyst Dan Ives wrote in a research note.
More from Dan:
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