U.S. ride-hailing and food delivery giant Uber raised its guidance for adjusted profitability in the first quarter, a rosier than anticipated outlook triggered by a spike in demand.
In a fresh 8-k filing this morning, Uber said it now expects adjusted EBITDA — a heavily-modified profit metric that strips out a host of costs, including share-based compensation — of $130 million to $150 million in the first quarter. That’s up sharply from its prior guidance of $100 million to $130 million, provided during its Q4 2021 earnings call last month.
The upshot? Demand for rides and food delivery is up and nearly back to pre-pandemic levels.
On the ride-hailing front, Uber said that it has seen its trips-taken metric recover to 90% of February 2019 results, while gross bookings have returned to 95% strength over the same time period. Uber’s CEO Dara Khosrowshahi added in the same filing that “airport Gross Bookings exiting February were up over 50% month-on-month, and that the company is “preparing for the upcoming travel season to be one of the strongest ever.”
Importantly, demand for ride-hailing appears to be across all use cases, according to Khosrowshahi, who noted that growth in ridership includes trips for travel, commuting and evening outings.
Uber also noted that it has seen “sequential improvement in both of its mobility and delivery segment Adjusted EBITDA.” Why share the nuance when the aggregate numbers have been updated? Uber wants to stress that while its ride-hailing business (“Mobility”) is recovering, that performance boost is not coming at the cost of its food delivery business (“Delivery”).
Uber’s food delivery business provided a huge hedge in gross bookings (GMV) terms during the pandemic when ride-hailing cratered as folks stayed at home.
There has been market concern that ride-hailing and delivery were two sides of the same coin, meaning that they couldn’t come up heads at the same time; Uber’s latest figures suggest that it is indeed possible. The SEC filing implies that it has more operating leverage than some may have anticipated.
Uber shares are off around 1.8 % today, despite starting on a strong note. Tech stocks more generally are suffering today in a global market rout.
Lyft has not issued new guidance on its upcoming first quarter earnings. The Uber rival’s previous earnings report show that ridership is on the rebound. The question is if Lyft has seen the same uptick in rides through the first two months of 2022.
Notably, Lyft doesn’t operate a food delivery business like Uber. Depending on one’s view on diversification specialization, Lyft’s singular focus on ride-hailing is a strength or weakness.
It’s very 2022 that Uber boosted its profit guidance and still managed to see its valuation decline in midday trading; the company has given back all of its pandemic gains in recent months. Indeed Uber’s valuation today is lower than it was in mid-2019, far before it weathered the pandemic, scaled its delivery business, and managed to turn in successive profitable, albeit on an adjusted basis, quarters.
It’s tough out there.
