Uber’s latest earnings reinforce two things about its business during the pandemic: People are still hesitant to book rides, and they’re increasingly having their food and groceries delivered.
Uber Eats, Uber’s delivery business, is benefiting from a “massive structural shift in consumer behavior,” Uber CEO Dara Khosrowshahi said during a conference call with investors on Thursday. “Consumers are quickly becoming accustomed to the magic of having anything delivered to their door in half an hour.”
Uber on Thursday reported $3.1 billion in third-quarter revenue, slightly below analyst forecasts of $3.2 billion. The company lost $1.09 billion, a stunning amount, but a slight improvement over the $1.16 billion it lost during the same period last year.
Uber had 78 million monthly active users at the end of the quarter, down 24% year-over-year. But that marked a 41% improvement from the previous quarter, showing signs that some people are returning to the service after sitting out during the early days of the pandemic.
Following the earnings report, Uber’s shares dropped more than 3% in after-hours trading. But during the investor call, they recovered slightly to $41.50 per share, or down 1% after gaining more than 2% in regular trading.
Here are three key takeaways from the earnings report.
Prop. 22 will expand beyond California
Khosrowshahi praised this week’s passage of Prop. 22, the California ballot initiative that his company supported, that lets it continue classifying its workers at independent contractors. The measure saves gig companies big costs that they would’ve had to spend on paying employees and the full benefits that come with them.
He also said the company intends to “loudly” advocate for new laws like Prop. 22 worldwide.
“We think over the long term [this model is] going to win,” Khosrowshahi said.
Uber expects new benefits, including a guaranteed minimum hourly wage and health benefits, to raise its costs about 5%, much of which it expects to pass on to its customers. Khosrowshahi said he doesn’t expect lower demand for rides because of rides becoming more expensive.
Food delivery continues to boom
The star of the third quarter, as it was in the previous quarter, was Uber Eats. The unit’s revenue jumped 125% year-over-year to $1.45 billion, marking the second sequential quarter during which sales more than doubled.
Khosrowshahi said the company has managed to increase its profits, excluding certain expenses, on each delivery by reducing discounts and by virtue of customers spending more on their orders. During the quarter, Uber Eats’ lost $183 million, excluding certain expenses, a 42% improvement over the same period last year.
Eats also recently started letting merchants buy ads nationwide on its app. Khosrowshahi expects the ads to help improve the unit’s otherwise lower profit margins from grocery and pharmacy delivery.
The delivery business will become profitable, minus certain expenses, next year, Khosrowshahi promised.
Ride-hailing still lags
Uber’s core ride-hailing business, under strain from the pandemic, is showing signs of recovery in some markets.
“The U.S. Has been an overall drag on our global recovery,” Khosrowshahi said. “But we have some bright spots, even in the U.S..”
Revenue from rides fell 53% year-over-year to $1.37 billion, an improvement over last quarter’s 67% decline.
Khosrowshahi said that rides are increasing in some cities as people return to commuting. In New York City, for example, gross bookings, or the money Uber collects before paying drivers, increased about 63% in October compared to year-ago levels.