SAN FRANCISCO – Uber on Thursday (Nov 5) reported that it lost US$1.1 billion (S$1.5 billion) in the recently ended quarter as the pandemic walloped its ride-hailing business, but boosted its food delivery service.
Revenue in Uber’s mobility unit was down 53 per cent from the same quarter last year, while money taken in from drivers delivering restaurant meals or other orders more than doubled, according to the San Francisco-based company.
“Despite an uneven pandemic response and broader economic uncertainty, our global scope, diversification, and the team’s tireless execution delivered steadily improving results,” chief executive Dara Khosrowshahi said in an earnings release.
Uber shares that had been buoyed by the triumph of an initiative that lets drivers remain classified as independent contractors in California sank nearly three percent in after market trades.
Demand for rides directly correlates to pandemic lock-down restrictions in cities, and Uber’s mobility and deliver units are positioned to take advantage of returns to pre-virus lifestyles, Mr Khosrowshahi said in an earnings call.
“Uber is becoming the go-to app for getting around or getting something delivered your door in 30 minutes,” Mr Khosrowshahi said.
“As consolidated growth returns, it will return to a more profitable foundation,” said chief financial officer Nelson Chai.
The so-called “gig economy” at the heart of Uber’s business model survived a key test in this week’s election as California voters approved a referendum backed by ride-hailing giant which preserves the use of contractor-drivers and potentially opens the door to wider adoption of that model.
The initiative known as Proposition 22 backed by Uber, Lyft and other on-demand companies appeared headed for passage as the measure was backed by some 58 per cent of state voters, according to incomplete results.
The measure effectively overturns a state law which would require the ride-hailing firms and others to reclassify their drivers and provide employee benefits.