Uber has reported an 18% YoY drop in revenue in its third-quarter earnings as the impact of the ongoing coronavirus pandemic continues to affect its main ride-hailing business.
During the quarter, the company reported a total revenue of about $3.1 billion, falling just short of $3.20 billion projected by Analysts at Refinitiv.
Ride revenue declines but ride-hailing business is recovering
A breakdown of the report shows that a total of $14.75 billion was made in gross bookings during the quarter, a 10% drop from the amount recorded during the same period last year.
Mobility which includes rides contributed $5.91 billion, a 50% YoY decline while delivery contributed the majority with $8.55 billion after recording a growth of 135%.
In terms of revenue, Rides revenue declined 53% year-over-year to $1.37 billion. Despite the decline, CEO Dara Khosrowshahi has expressed that the rides business is showing early signs of full recovery.
“Uber rides are coming back faster than other transportation alternatives, including mass transit in many cities and taxis in New York City. Uber comes back when cities come back. If anything, Uber is an advantaged form of transportation versus others.”
Delivery grows by 125%
While rides have been struggling, Uber delivery arm continues to grow. In the last quarter, revenue generated through delivery grew 125% year-over-year to $1.14 billion. This growth is powered by the success of Uber Eats.
The increased growth was fueled by Uber’s $2.65 billion acquisition of Postmates in July. The courier service was once seen as a competitor to Uber Eat. The company has also acquired Cornershop, a grocery delivery business based in New York City.
Khosrowshahi revealed that Uber Eats now has 560,000 restaurants on its platform, including about 30% of restaurants in the US, and about 15% of those in France.
Uber has lost $5.8 billion in the first 3 quarters of 2020
Overall, Uber lost $1.1 billion during the quarter, an improvement from the $1.16 billion lost during the same period in 2019.
In comparison, Uber lost $1.8 billion in the second quarter and lost a staggering $2.9 billion during the first quarter of this year. So far Uber has lost $5.8 billion in 2020.
In total, Uber lost $8.5 billion in 2019.
Despite the losses, Uber’s chief financial officer Nelson Chai said the company remains confident in its ability to achieve profitability on an adjusted basis before the end of next year.
Since Q2, Uber raised half a billion dollars in equity funding to fuel the growth of its logistics arm, Uber Freight. Uber Freight recorded just $290 million in gross bookings during the third quarter of 2020, a 30% increase from the same time last year.
The earnings report comes after Uber won the Prop 22 ballot measure that defends Ubers gig-based business model. The company’s stock rose nearly 15% on Wednesday following news that “Prop 22,” had been passed, giving investors reason to be optimistic about Uber’s classification challenges in the future.
Also, Uber finally received an 18-month license to operate in London after the renewal was initially rejected.
Suggested read: Uber and Lyft Push for Prop 22 after Appeal Court Classified Californian Drivers as Employees
Besides the political battle to keep its business model, Uber has faced pandemic-related negative impacts on its core ride-hailing business through most of 2020.
While losses have been reducing with the slow recovery of rides across its markets, faster growth is needed in its core ride business if the company wants to achieve its profitability goal next year.
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