Daily Management Review

Coronavirus Lockdown Results In $2.9 Loss For Uber In First Quarter


Coronavirus Lockdown Results In $2.9 Loss For Uber In First Quarter
The coronavirus pandemic severely impacted the business of Uber in the forts quarter that resulted in the company reporting a loss of $2.9 billion. The company however said that that pandemic hit will be cushioned to an extent by   its growing food delivery business and its aggressive cost reducing measures.
Uber’s bike and scooter business, Jump will be sold off to Lime, a company in which it is investing $85 million, said the ride-hailing giant on Thursday. Jump had been losing about $60 million a quarter.
“While our Rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet, focus additional resources on Uber Eats, and prepare us for any recovery scenario,” said CEO Dara Khosrowshahi in a statement. “Along with the surge in food delivery, we are encouraged by the early signs we are seeing in markets that are beginning to open back up.”
Earlier this week, the San Francisco-based Uber announced that it will be axing 3,700 full-time workers which amounted to about 14 per cent of its global work force. The coronavirus pandemic has forced people to remain indoors amid lockdown orders across the world as well as to maintain social distancing. That resulted in a very steep drop in people using Uber’s services.
The growth in revenue for the first quarter was at 14 per cent year on year, at $3.54 billion.  
On the other hand, there was a 53 per cent spike in revenues from the company’s Uber Eats meal delivery business as people stuck indoors ordered more restaurant food. The company also exited a number of markets, including the Czech Republic, Egypt and Honduras, where its food delivery business was running in loss. At the same time, the company also added key accounts including Chipotle, Dunkin' and Shake Shack, which now enables the company to deliver from grocery and convenience stores during the lockdown.
“At a time when our rides business is down significantly due to shelter-in-place, our Eats business is surging,” Khosrowshahi said on a conference call with investors. “The big opportunity we thought Eats was just got bigger.”
The company reported an increase of 8 per cent in gross bookings to $15.8 billion while there was a 54 per cent growth in the food delivery business. The company also reported 3 per cent decline in rides.
Also during the first quarter, the investments that the company had made in Chinese ride-hailing giant Didi, Singapore-based Grab and others dropped by about $2.1 billion because of collapse of demand in the regions the companies operated which significantly hit the bottom line of the company during the quarter.
Uber is also considering grocery delivery as a part of its business in the future in the United States.
“There's going to be more room for more than one player,” Khosrowshahi said. “We’re in many of these cities already. So we just have the infrastructure to be able to get started in these cities ... in a very low cost way.”