Gas prices and inflation have not stopped Uber’s business from booming
Gas prices are rising and inflation is soaring, but Uber’s rebound from the pandemic has not been slowed down by either.
The ride-hailing company announced Tuesday that its revenue soared more than doubling over the past year during the three months ended June.
Its quarterly earnings report stated that its platform is being used by more consumers and drivers than ever before. Every month, Uber’s platform was used by 122 million people, up 21% from last year.
The most astonishing news for Uber, a company with a history of significant losses, is that the company has become cash flow positive, which means it has taken in more money than it has spent, excluding capital expenditures, which typically include the purchase of properties and other assets. The free cash flow generated by the company during the quarter was $382 million.
However, Uber’s investments led to its continued unprofitability. There was a net loss of $2.6 billion for Uber, mostly due to investments in Didi and Grab, which are both international ridesharing companies. A great deal of regulatory pressure has been applied to Didi in China.
Over two years after the pandemic decimated travel demand, Uber’s business offers an extraordinary window into consumer trends, which hurt Uber’s Rides business and helped Uber’s Eats business. A year-over-year increase of 12% in delivery bookings was reported by the company during the previous quarter.
Uber’s delivery services have continued to grow. An Uber grocery delivery service was announced late last month. For the first time, Uber Eats is offering new features that will incentivize users to order groceries through the service, including live order tracking and product replacement suggestions.
Khosrowshahi said Tuesday that Uber had delivered balanced growth on its platform, which was now the largest ever with both consumers and earners using it at record levels.
Khosrowshahi added: “We don’t want to be in an economic environment or during an inflationary period, which affects so many people, including Uber drivers.” Nevertheless, he said Uber has benefited from the economic environment.
In early trading Tuesday, Uber’s shares jumped more than 15%.
Despite soaring inflation, rising interest rates, fears of a looming recession, and the fallout from the war in Ukraine, Uber’s results come at a time when much of the tech industry is turning to hire freezes and layoffs.
According to Khosrowshahi, the company will cut spending and rethink its hiring methods in light of a “seismic shift” in the market. According to Khosrowshahi, the company can continue to grow while being diligent about its expenses, and it has been. Aside from its size, Uber offers a variety of business services that make it attractive to businesses.
Khosrowshahi and Nelson Chai, the chief financial officer and CFO of the company, said the competitive environment today is the most competitive they’ve experienced globally since they started working together. As Uber’s CEO since 2017, Khosrowshahi oversees the company.
According to Khosrowshahi, no business can achieve glory by spending money. This is a striking departure from the growth-at-all-costs model Uber popularized years ago.
As Uber improves its platform to better serve drivers, Khosrowshahi said it has “applied discipline.” In addition, workers can switch readily between driving and delivering if they sign up for better onboarding. According to him, the machine works right now.
Upfront Fares, which Uber announced last week, will now be available in more cities across the United States, allowing drivers to know in advance how much they will earn and where the customer is headed. This feature is one of the most requested by drivers, yet Khosrowshahi noted that pricing those trips correctly requires a lot of algorithmic work.
edited and proofread by nikita sharma
