After a spike in demand for travel and food delivery helped the American ride-sharing giant report better-than-expected results for the January-March period, Uber Technologies Inc. forecast quarterly core earnings above estimates on Tuesday.

The company’s shares increased by 7%, contributing to a slight increase in those of rival Lyft Inc., which releases earnings on Thursday.

Uber is profiting from its hegemonic status in important international markets as travel picks up after a pandemic-induced slump. It has also helped it provide lesser incentives to gig workers, according to analysts, as the number of people looking for additional money has increased.

“Our clear lead on driver preference has allowed us to better serve this growing demand: 5.7 million drivers and couriers earned $13.7 billion (including tips) on Uber during the quarter, both all-time highs,” CEO Dara Khosrowshahi said.

“The rideshare category in the United States and Canada is now growing faster in 2023,” he said, following a mediocre performance in the previous two years.

Compared to analysts’ expectation of $749.1 million, Uber expects adjusted profits before interest, taxes, depreciation, and amortisation (EBITDA) of between $800 million and $850 million for the June quarter, according to Refinitiv.

The business claimed that it was on track to achieve operating income profitability this year and that it was maintaining a flat workforce following a sequential decline in headcount in the first quarter.

Uber also anticipated gross bookings between $33 and $34 billion, up from the projected $33 billion.

“Return to work/travel tailwinds are causing mobility to outperform ‘normal’ 1Q seasonality,” Oppenheimer & Co analyst Jason Helfstein said, adding that increased driver density and trips were boosting the fee Uber gets on transactions.

Due to a 72% increase in the ride-hailing market, Uber’s first-quarter revenue increased by 29% to $8.82 billion, exceeding projections of $8.73 billion.

The revenue increase for the food delivery operation was somewhat higher than anticipated at 23%, and Uber stated that it anticipated “strong growth” in the upcoming quarters.

Uber’s adjusted EBITDA reached $761 million, a record high, while the adjusted loss of 8 cents per share was less than anticipated.

On a conference call following the release of earnings, Uber’s Khosrowshahi stated that Lyft “is looking to price competitively with us,” but added that “the days of paying for share and essentially using shareholder money to buy share temporarily, those days are over.”

According to Oppenheimer’s Helfstein, Lyft has been compelled to become more conservative with driver incentives, encouraging Uber to follow suit and improving its profits.

(Adapted from Reuters.com)

Categories: Economy & Finance, Entrepreneurship, Regulations & Legal, Strategy, Sustainability