Uber’s food delivery business doubles as ride demand crushed amid COVID-19

Uber Technologies Inc said demand for its food delivery service more than doubled in the second quarter as many users remained largely homebound, while demand for ride-hailing trips was only marginally recovering from pandemic rock bottom.

The company said that despite those larger challenges it is sticking to its goal of being profitable on an adjusted basis before the end of 2021 thanks to stringent cost-cutting measures and a strong balance sheet. Uber recorded an adjusted loss in earnings before interest, taxes, depreciation and amortization of $837 million in the second quarter.

Shares dropped 5.6% to $32.75 in after-hours trading.

Ride-hailing trips, in the past responsible for nearly two-thirds of Uber’s revenue, increased 5 percentage points from their low in April, but gross bookings remained down 75% from last year.

The company on Thursday posted a $1.8 billion net loss in the months from April to June, including charges related to the laying off of 23% of its global workforce during a period when infections of the novel coronavirus continued to spread in the United States, Uber’s largest market.

The number of active platform users nearly halved year-over-year, from 99 million to 55 million.

Uber’s second-quarter revenue fell 29% to $2.24 billion from the year prior, beating analysts’ average estimate of $2.18 billion, according to IBES data from Refinitiv.

Revenue at Uber Eats doubled to $1.2 billion, boosted by greater demand for delivery as Americans largely continue to stay home. Uber last month expanded its delivery reach by announcing the acquisition of Postmates Inc for $2.65 billion to expand the business of supplying everyday goods.

While Uber’s ride-hailing segment remained battered by the coronavirus crisis, it was the only segment generating an adjusted EBITDA profit, of $50 million.

Uber Eats, whose gross bookings more than doubled, continued its loss-making streak but narrowed losses, recording a $232 million adjusted EBITDA loss in the second quarter.

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