Uber rides hammered by the pandemic; food delivery business doubles

By Rahul Vaimal, Associate Editor
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In the second quarter, the homebound customers more than doubled their orders from Uber’s food-delivery service while demand for its ride-hailing services witnessed only a slight improvement from the pandemic caused slump.

The firm’s second-quarter revenue dropped 29% from the previous year to $2.24 billion, but beats the analysts’ average estimate of $2.18 billion, according to Refinitiv’s IBES data.

In the 69 countries where Uber operates, the number of active users of the platform went down from 99 million to 55 million year on year, almost halving.

Uber’s ride-hailing segment remained battered by the coronavirus crisis, with revenue declining $1.25 billion from the United States and Canada, its largest combined market.

Though the US-based firm saw a rise of 5% in their ride-hailing trips since April, gross bookings remained down 75% from last year. Usually, the ride service accounts for almost two-thirds of Uber’s total revenue.

In a conference call, Uber’s Chief Executive Officer, Dara Khosrowshahi informed analysts that ride recovery depended on the ability of different countries to contain the virus.The world’s recovery rates are currently led by Asian countries.

Ride bookings in Hong Kong and New Zealand occasionally surpassed pre-COVID-19 peaks. Though trip requests in Spain, Germany and France have improved it is just a negligible rise compared to last year.

Khosrowshahi said, “Our global geographic footprint remains a huge advantage.”

As people continue to remain at home, revenue at UberEats doubled to $1.2 billion, boosted by higher demand for delivery. Uber expanded its delivery reach last month by announcing a $2.65 billion acquisition of Postmates to expand the business of supplying everyday goods.

UberEats managed to limit losses as gross orders almost doubled. It expects to be profitable within a couple of years in the vast majority of countries in which it operates.

In recent months, UberEats was forced to close operations in eight smaller markets including the Middle East and Eastern Europe. Also, in India, it sold its struggling food delivery business to a local competitor in exchange for a stake in the business.

Despite these bigger challenges, the business said it is able to stick to its target of being profitable on an adjusted basis by the end of 2021. Uber’s solid balance and strict cost-cutting efforts have played a major role in this achievement.