Uber rides demand takes COVID-19 hit but food-delivery business doubles

Uber's quarterly sales tumble, ending a decade of growth on Covid-19 hit

CFO Chai said Uber expected losses in the third quarter to be roughly the same. Delivery generated $885m in adjusted net revenue, while Uber's mobility business generated $793m in adjusted net revenue. Uber last month expanded its delivery reach by announcing the acquisition of Postmates Inc for $2.65 billion to expand the business of supplying everyday goods. The food delivery business on the other hand saw a rise of 162% in its ANR, a testament to the fact that Uber might be witnessing a massive shift in its business.

CEO, Dara Khosrowshahi said they have a "natural hedge" across two segments along with a global footprint.

Uber said revenues from the mobility segment declined to $790 million in Q2 2020 from $2.37 billion in the year-ago period. "Asia, excluding India, is in the recovery lead", said Khosrowshahi.

"We've essentially built a second Uber in under three years", he said on the Q2 2020 call transcribed by Seeking Alpha. With many retailers, schools and workplaces closed or at reduced capacity, transportation use will probably remain low for the foreseeable future, and Uber could be "permanently impaired", said Daniel Morgan, a portfolio manager at Synovus Trust Co. USA and Canada revenue was down 36% year-over-year at $1.25 billion, Latin America revenue slid 44% to $232 million, and Europe, Middle East and Africa revenue (EMEA) was down 21% at $401 million. Mobility, which is predominantly made up of ride-hailing but also includes scooter rentals, declined 75% to $3.05 billion. Uber has also slashed thousands of jobs this year in a bid to cut overhead costs. Analysts expected less from delivery and more from ride-hailing in the quarter. It also helped to improve adjusted-EBITDA to a loss of $232 million.

The company ended the quarter with US$6.8 billion in unrestricted cash, US$1 billion in short-term investments and equity stakes in Didi, Grab and Yandex totaling US$9.4 billion.

Uber didn't address the effect that a possible worker reclassification of its drivers could have on operations. If Uber reclassifies its drivers as employees, ride prices would increase as much as 30% in San Francisco and as much as 120% in the less populated Inland Empire, where demand is sparse, according to an analysis by Uber.

In addition, California lately enacted a regulation (AB-5) that will make it really hard for "gig economy" providers, like Uber, to classify employees as independent contractors, a NY federal judge ruled that Uber and Lyft motorists should be paid unemployment gains, and the Pennsylvania Supreme Court dominated that an Uber driver was not self-employed and should really have been eligible for unemployment compensation.

But in the United States, which is one of Uber's largest markets, rides were down 50% to 85% in many major cities.

Uber, a ride-hailing cab giant, based in the US, reported second-quarter revenue that surpassed Wall Street's expectations even though the three month period suffered owing to the COVID-19 pandemic.

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