Uber Finally Makes a Profit, But Not Really

Matt Posky
by Matt Posky
uber finally makes a profit but not really

On Thursday, Uber Technologies reported its first profitable quarter since the company launched in San Francisco way back in 2009. This represents a huge achievement for the company, which has been investing heavily to expand the business in the hopes that it will eventually become the world’s favored ride-hailing, courier, and food-delivery service.

But here’s the rub. Uber is technically only profitable on an adjusted basis that takes a pretty narrow view of its finances. Despite this, it’s still a step in the right direction and may foreshadow the reliable earnings the company has been seeking for ages.

Concerns persist, however. Uber has needed to assuage investor fears regarding driver shortages, saying that the business would increase spending to incentivize people to get back on the road. The company has already dropped $250 million toward the cause, padding out its ranks by 640,000 since the start of 2021. So it’s unclear how much more money it wants to put toward luring new drivers. But Reuters reported that this strategy wouldn’t even be deployed until after the business felt the pandemic was thoroughly in rearview, adding that it wasn’t the only issue Uber needed to address.

From Reuters:

But a massive drop in the value of its stake in Chinese ridehailing company Didi drove a $2.4 billion net loss in the third quarter, and Wall Street viewed Uber’s fourth-quarter forecast as disappointing. Shares bounced in after-hours trade and were up about 1 [percent] as Uber briefed Wall Street in a call.

The California-based company reported adjusted earnings before interest, taxes, depreciation and amortization, a measure that excludes one-time costs such as stock-based compensation, of $8 million for the quarter ended Sept. 30. That compared to a loss on the same basis of $625 million a year ago.

Uber forecast an adjusted profit of $25 million to $75 million for the last quarter of 2021. Analysts on average expected $114 million, according to Refinitiv data.

Despite the adjusted profit, Uber’s earnings report came as a disappointment after smaller U.S. rival Lyft Inc on Tuesday reported its second consecutive quarterly adjusted profit at $67.3 million and said it expected adjusted EBITDA of between $70 million and $75 million in the fourth quarter.

Neither Uber nor Lyft are profitable on a net basis and nobody is sure when that might happen, regardless of whether they’re working within the company or analyzing it from the outside.

That said, Uber is trading higher today than it was at the start of the month and this has been attributed to the strength of its food-delivery services. For the quarter, reported revenue of $4.8 billion, which is up 72 percent from a year ago and above the forecasted of $4.4 billion. Gross bookings were $23.1 billion, which is 57 percent more than a year ago, and right within with the company’s recent guidance of $22.8 billion to $23.2 billion.

[Image: MikeDotta/Shutterstock]

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2 of 8 comments
  • Dal20402 Dal20402 on Nov 06, 2021

    They've finally had to raise prices to cover costs. No one is going to hand them blank checks anymore. And that's a good thing. When they were carrying everyone around for 2/3 of cost, they were creating massive externalities: congestion in city centers, damage to non-Uber car services, damage to transit systems through both lower ridership and worse congestion. It's fine if they want to compete, but they shouldn't be able to dump.

  • Lightspeed Lightspeed on Nov 08, 2021

    Companies this big don't worry about making a "profit" all the real action is in stocks/securities/crypto/debt etc. etc. all powered by AI.

  • Akear The Prius outsells all GM EVs combined, which is really not saying much.
  • Akear The sad truth is the only vehicle FCA sold that broke the 200,000 sales barrier was the 200. I rented one and found it impressive. It is certainly better than the Renegade. At this point I would buy a used 200 over a Renegade. Who in their right mind would buy a Renegade?
  • Akear I just realized 80% of these EV vehicles producers are going to be liquidated within the next five years. It is not possible to survive by selling only 3000 vehicles a year. This reminds me of the dot.com bust of the late 90s and early 2000s. Those who don't learn from history repeat it.
  • 3SpeedAutomatic I drove a rental Renegade a few years back. Felt the engine (TIgerShark) was ready was ready to pop out from under the hood. Very crude!! Sole purpose was CAFE offsets. Also drove a V6 Cherokee which was very nice and currently out of production. Should be able to scoop up one at a fair deal.🚗🚗🚗