Uber’s Results Gas Up Rivals


Uber Technologies

UBER 17.88%

showed its investors the money on Tuesday, announcing its first ever quarter of positive free cash flow.

For a company that posted operating losses of over $3 billion and burned through $2 billion in cash in 2018, that is quite a feat. Investors sent shares up nearly 15% in morning trading following Uber’s report, which largely showed strength in ride-share, easing growth in delivery and high take rates across the board that contributed to a significant bottom-line beat.

Certainly, Tuesday’s results suggest Chief Executive

Dara Khosrowshahi

meant business when he told his employees in May about his intentions to meet what he called the seismic shift in the market with some seismic shifts of his own.

Investors were clearly eager to infer good things for Uber’s competitors based on Tuesday’s news: Shares of




were up 11% and 4%, respectively, ahead of their own second-quarter earnings reports due Thursday. Those results will reveal just how much of Uber’s outperformance was due to Mr. Khosrowshahi’s savvy management and how much due to a booming sector.

Uber said Tuesday that its trips were up 12% in the second quarter versus the same period of 2019. Compared with the fourth quarter of 2019, though, just before Covid-19 hit, trips were still down about 2%. That doesn’t bode as well for Lyft, which previously said on its first-quarter conference call that its ride volume was down around 30% from fourth-quarter 2019 levels, implying a lot of recovery was still needed. A recent note from

Gordon Haskett’s

Robert Mollins showed second-quarter ride-share trips industrywide in New York City were still down 17% even versus the second quarter of 2019.

In addition to high ride prices, at least some of Uber’s outperformance in mobility revenue came from a change in how it accounts for its ride operations in the U.K., where Lyft doesn’t compete. And bottom-line outperformance seemed to be boosted by a soaring mobility take rate of 26.6% in the quarter—over 7 percentage points higher than it was three years before.

Uber also said its heavy investments in driver supply have been paying off, reporting a record driver and courier earner base of almost five million at the end of the second quarter. Uber said it also logged record monthly active platform consumers across its businesses, totaling 122 million.

The puts and takes of Uber Eats results also make comparisons difficult. On the positive side, Uber said U.S. and Canada gross bookings in the quarter for its delivery business rose 21%, including Postmates, roughly in line with what Wall Street is modeling for rival DoorDash’s growth in gross order value for the second quarter. But Uber also said gross bookings for its international delivery business fell 5%, weighted by negative foreign exchange—a growing factor for DoorDash as it has been focused this year on expanding further into Europe.

In delivery overall, Uber said it is experiencing slower category growth, guiding to delivery gross bookings for the third quarter that are roughly flat sequentially. All that is a very bad sign for a more international delivery business like

Just Eat Takeaway.com,

which is set to report half-year results Wednesday. Jet, which is Amsterdam-based, has been relying on strength in its European business to offset the sluggish performance of its U.S.-focused Grubhub platform.

With that in mind, even Uber investors shouldn’t expect a similarly outsize encore performance in the third quarter. Ride-hailing seems to be back in business, thanks in part to the return of shared and airport rides, and slowing delivery growth shows there are only so many things consumers are willing to pay for to avoid getting in their cars to pick up. The midpoint of Uber’s overall booking guidance for the third quarter was actually slightly below what analysts had been forecasting.

Slower growth in this market means Uber has no choice but to keep the cash flowing.

After enduring the pandemic, ride-share companies like Uber and Lyft are now facing a new world of high inflation, driver shortages, and dwindling passenger numbers. WSJ’s George Downs explains what they’re doing to try and survive. Illustration: George Downs

Write to Laura Forman at [email protected]

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