Uber achieves its inaugural operating profit as part of its efforts to reduce financial losses

Uber achieves its inaugural operating profit

Uber Technologies reported its first-ever operating profit in the second quarter, marking a significant milestone in its ongoing efforts to minimize losses in its ride-hailing and food delivery businesses. The positive results for the three-month period ending in June were primarily driven by substantial growth in Uber’s core operations. The number of rides in the U.S. and Canada surpassed pre-pandemic levels for the first time, and delivery demand remained strong despite the reopening of restaurants.

This quarter was the first time since Uber’s inception in 2009 that the company reported a profitable underlying operation. The strong operating performance also contributed to Uber achieving a net profit during the quarter. Although Uber had previously reported net profits, those were largely due to investment gains offsetting operational losses.

For the third quarter ending on September 30, Uber projected continued growth. However, despite the positive news, Uber’s shares declined by 3.5% in morning trading after the earnings announcement.

During the second quarter, Uber posted a profit of $394 million, a significant improvement from the $2.60 billion loss reported a year earlier. The earnings outperformed analysts’ expectations of an $18 million loss and were primarily driven by a strong operating profit of $326 million. Additionally, Uber’s revenue increased by 14% to $9.23 billion, and gross bookings grew by 16% to $33.60 billion. Gross bookings are a measure of consumer demand, while revenue represents Uber’s share from these transactions.

However, not all segments performed equally well. Uber’s freight division, which accounts for under a quarter of its revenue, experienced a decline of 30% in bookings and revenue during the quarter.

To improve its financial position, Uber took various measures such as expanding advertising on its app, reducing discounts and incentives to consumers and drivers, and optimizing its delivery processes to improve operational efficiency. The company also carried out job cuts, mainly in human resources, freight, and overseas food-delivery operations, which accounted for less than 3% of its workforce.

Uber also announced that Chief Financial Officer Nelson Chai will step down in January, and a search for his successor is underway. Chai played a significant role in leading Uber’s initial public offering and overseeing major deals, including the acquisition of Postmates in 2020.

Uber’s Chief Executive, Dara Khosrowshahi, expressed confidence in the company’s ability to sustain strong incremental profit generation through disciplined cost management and balanced capital allocation. However, he acknowledged that expectations for the company’s performance are continuously rising.