Uber lost $2.9 billion in the first quarter of 2020, its biggest loss in three quarters. The company also reported $3.54 billion in revenue. Gross bookings in its ride-hailing business fell 3 percent, while bookings in its Uber Eats division were up more than 54 percent year over year, thanks to increased demand for food deliveries.
Uber’s ride-hailing business has plummeted a result of widespread shutdown orders due to the pandemic. The company announced this week that it would lay off 3,700 full-time employees, or about 14 percent of its workforce. Another 400-plus employees from Uber’s Jump bike and scooter division will also be laid off as part of an investment deal with Lime, The Information reports.
Uber’s riding-hailing business is down 80 percent, the company’s CEO Dara Khosrowshahi said in a call with investors. “I won’t sugarcoat it,” he said. “COVID-19 has had a dramatic impact on [Uber’s] rides [business.”
But trip volume is coming back, albeit slowly, Khosrowshahi said. “There are some green shoots driving restrained optimism,” he said. “We’ve seen week-on-week growth globally for the past three weeks. This week is tracking to be our fourth consecutive week of growth.” Uber’s main rival, Lyft, also said business was slowly coming back over the last few weeks.
Still, the pandemic has thrown a wrench in Uber’s plan to be profitable by the end of the year. The company’s $2.9 billion net loss for the quarter was an increase of 163 percent over the previous quarter. Gross booking, or total customer payments to Uber before payments to drivers and other fees or discounts, fell 14.5 percent from the previous quarter.
Uber Eats is an obvious bright spot for the company, but even that is under strain thanks to regulatory pressure and competition from other players like GrubHub and DoorDash. Uber Eats saw an acceleration in demand since mid-March with 89 percent year-over-year gross bookings growth in April excluding India, Khosrowshahi said. Meanwhile, Uber recently shuttered its Eats business in eight markets that were unprofitable for the company. Still, the company is bullish about the growth in its food delivery business.
“There has been a tremendous increase in restaurant sign-ups leading up to rapid improvement in selection in major markets like the US as well as behavioral shifts,” Khosrowshahi said. “We believe these trends are here to stay and will result in expansion of the entire category.”
Of course, Uber’s problems pre-date the coronavirus crisis. The company has been under pressure from investors to stem its enormous losses and show how it can start posting a profit. Uber and Lyft, which both went public in 2019, have set records for the amount of money lost in the run-up to their respective IPOs. And since going public, both companies have continued to lose money, raising questions about the long-term sustainability of app-based ride-hailing as a business. Uber had to lay off around 1,000 workers last year amid restructuring efforts.
The company is also under increased regulatory scrutiny. Uber was recently sued, along with Lyft, by California’s attorney general for failing to comply with the state’s groundbreaking new gig work law that makes it harder for the company to classify drivers as independent contractors. It also lost its license in London after regulators identified a “pattern of failures.”