Uber’s business is booming despite high gas prices and inflation

CNN
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Even higher gas prices and runaway inflation aren’t slowing Uber’s rebound from the worst days of the pandemic.

Uber (UBER) said on Tuesday that its revenue reached $8.1 billion in the three months to June, more than doubling from a year earlier, as more customers turn to the carpooling service.

The number of consumers and drivers using its platform is « at record highs, » the company said in its quarterly earnings report. Uber recorded 122 million people using its platform every month, up 21% from a year earlier.

Perhaps more astonishing for a company with a history of substantial losses, Uber said its cash flow was positive, meaning it took more money out of its operations than it did. it has only spent, excluding capital expenditures, which generally include property and other physical assets. The company said it generated $382 million in free cash flow during the quarter.

But Uber continued to be unprofitable largely because of its investments.. Uber posted a net loss of $2.6 billion, much of which ($1.7 billion) was related to its investments in other international transportation companies like Didi and Grab. (Didi, in particular, has been hit by enormous regulatory pressure in China.)

Uber’s business provides a unique window into consumer trends more than two years into the pandemic that initially decimated travel demand (damaging Uber’s Rides business) and accelerated delivery adoption online food store (helping its Eats business). In the previous quarter ending in March, the company said its ride bookings exceeded pre-pandemic levels and delivery bookings were up 12% year-over-year.

Uber continued to push its delivery deals. Late last month, Uber announced a new grocery ordering service. Although ordering groceries through Uber Eats has been available on the platform for two years, the update includes new options to encourage usage, such as advanced delivery scheduling, online order tracking direct and product replacement recommendations.

Uber CEO Dara Khosrowshahi said in a statement accompanying the results on Tuesday that the company « achieved balanced growth » and did so « on a larger platform than ever before, with more consumers and employees using Uber now at record highs. »

“Nobody wants a tough economic environment or high inflation that affects so many of us, including Uber drivers,” Khosrowshahi added during a conference with analysts on Tuesday. But he said the economic environment has allowed Uber to show its strengths.

Uber shares jumped more than 15% in early trading Tuesday after the results.

Uber’s results come as much of the tech industry turns to hiring freezes and layoffs in a bid to weather a financial downturn marked by soaring inflation, rising interest rates interest, fears of an impending recession and the fallout from the war in Ukraine.

Khosrowshahi told staff in May that the company would cut costs and rethink its approach to hiring amid a “seismic shift” in the market. On Tuesday’s call, Khosrowshahi stressed that the company can be, and has been, diligent about spending and continues to grow. He also noted that Uber benefits not only from its size but also from its range of commercial offers.

« When we look at the competitive environment, this is the strongest we’ve felt globally since Nelson and I probably started here, » Khosrowshahi said, referring to himself and the company’s chief financial officer. company., Nelson Chai. Khosrowshahi has been the head of Uber since 2017.

In a stark departure from the grow-at-all-costs model that Uber popularized years ago, Khosrowshahi also noted, « You can’t spend your way to fame in just any business. »

Khosrowshahi said Uber has been able to « enforce discipline » by making platform improvements to better serve drivers. This includes better integration to make it easier to sign up workers and an easier way to switch between driving and delivering. « Right now the machine is working, » he said.

Last week, Uber announced that it would expand its Upfront Fares feature to more cities in the United States to give drivers more information about the customer’s income and destination before accepting a ride. Khosrowshahi said on the call that this feature is one of the top requests from drivers, while noting that « there is a lot of algorithmic work that needs to go into pricing this trip correctly. »