Investors sold the shares despite Uber management's
assurances that the company can deliver a sharp turnaround in profitability
even as New York and other major cities reimpose some pandemic restrictions.
Uber posted an adjusted $509 million second-quarter loss
before interest, taxes, depreciation, and amortisation - a metric that excludes
one-time costs, including stock-based compensation - widening losses by nearly
$150 million from the first quarter.
Analysts on average had expected the company to report an
adjusted EBITDA loss of around $324.5 million, Refinitiv data showed.
Shares were down 5 percent in after-hours trading after
closing the regular session down 2.2 percent.
The company also warned investors that uncertainty from the
Delta variant of the coronavirus continues to impact visibility into recovery.
But Uber Chief Executive Dara Khosrowshahi told analysts on
a conference call that the company's food delivery business provided a hedge
against potential ride-hail declines and that July trends support the company's
confidence for the second half of the year.
Gross bookings during the second quarter reached an all-time
high of nearly $22 billion, with more passengers returning for trips while food
delivery orders also increased.
Nevertheless, the earnings call was dominated by questions
over driver supply and the ongoing impact of the pandemic.
Investors are worried about the ongoing shortage of drivers
in the industry as demand ramps up. Uber's smaller rival, Lyft, on Tuesday said
it expected limited driver supply to continue in the next quarter, requiring
further investments in driver incentives.
Uber said riders returned to its platform in greater numbers
in July and it expects the trend to continue in the coming months, together
with strong food delivery orders.
Uber reaffirmed its goal of hitting profitability on an
adjusted EBITDA basis at the end of this year and said it would reduce losses
to $100 million in the third quarter.
That assumes the more contagious Delta variant does not
reverse a gradual reopening of the US economy, an issue that Lyft said on
Tuesday it was monitoring.
Uber on Wednesday said monthly active drivers and food
delivery workers had increased by nearly 420,000 from February to July.
Passenger wait times in major US cities also decreased during that time, the
company said.
Uber spent a massive $250 million in driver incentive
investment in the second quarter, which increased losses at its ride-hail
business. Uber said mobility profitability will expand significantly as US and
Canadian driver investments fade, a trend it has witnessed in Australia and
other markets.
US driver supply increased by 30 percent from June to July,
even as incentives were reduced.
"We invested early and aggressively and are seeing very
positive momentum," Khosrowshahi said.
The company had urged US drivers to take advantage of the
incentives before pay drops to pre-COVID-19 levels as more drivers return to
the platform.
Total costs and expenses in the second quarter jumped by
over 57 percent to $5.12 billion year over year.
Uber also took advantage of unrealised gains in its
investments in Chinese ride-hail company Didi Global and self-driving company
Aurora to post second-quarter net profit of $1.1 billion.
Uber executives said the company might sell some of those
positions after clearing regulatory restrictions if the market offered
reasonable values for them.
Uber's delivery unit, which includes restaurant delivery
service Uber Eats, narrowed losses on a quarterly basis and more than doubled
gross bookings from last year.
Overall, the company reported second-quarter revenue of $3.9
billion, beating average analyst estimates of $3.75 billion, according to IBES
data from Refinitiv.
Uber doubled down on Uber Eats, which has been a pandemic
winner, by acquiring rival startup Postmates and last-mile alcohol delivery
company Drizly.
Uber is also expanding its grocery delivery business, having
announced partnerships with Albertsons Companies and Costco Wholesale.
In July, Uber also announced the acquisition of logistics
company Transplace for about $2.25 billion in a boon to its freight delivery
unit, which is now expected to break even on an adjusted EBITDA basis by the
end of 2022.
- Reuters
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