With inflation at a 40-year high and fears of a recession mounting, many expected consumers to start cutting non-essentials like take-out meals or rides across town.
But Uber’s latest financial report, covering the quarter ending June 30, indicates the company is managing to find its footing amid a tough macroeconomic environment, continuing in its mission to trim its losses while growing the business.
The company surged past revenue expectations, posting Q2 revenue of $8.07 billion, which is up 105% year-over-year. (Analysts anticipated $7.39 billion.) Uber also reported its first positive free cash flow in a quarter, generating $382 million.
“After meeting investors on the heels of our earnings report in May, I wrote to Uber employees that it was clear there had been a seismic shift in the market—and that investors were placing a high value on companies that can generate significant profits, cash flow and durable growth,” CEO Dara Khosrowshahi said in his prepared remarks.
“I challenged the team to meet our profitability commitments even faster than planned, and the team delivered,” he added.
Facing soaring inflation and consumers’ cost cutting efforts, gig economy companies have been under fire from investors. The sector had just began to recover from Covid shutdowns, and some analysts had been expecting a slowdown in food delivery to hamper any boost from travel rebounds. But Khosrowshahi said during a conference call with investors early Tuesday that surging inflation had shown little impact on its slate of services.
“We continue to benefit from a secular increase in the on-demand transportation of people and things, as well as a shift from retail spend to services spend, and we intend to continue capitalizing on these growth tailwinds in a profitable manner,” Khosrowshahi said in his prepared remarks.
Uber said bookings in its delivery segment, which contains restaurant, grocery and alcohol delivery, grew 7% from the same quarter a year ago to $13.9 billion. That missed analyst estimates. Uber is also anticipating delivery gross bookings to be roughly flat in the current quarter compared to Q2. Still, the company is making more money from delivery than ever before.
Uber reported 122 million monthly active platform consumers, up 21% year-over-year and beating Wall Street’s expectations. “Right now, you know, the marketplace looks strong,” Khosrowshahi later added on the investor call.
Inflationary pressures have also appeared to boost Uber’s driver base, an area that rideshare companies have struggled with due to the pandemic. The CEO said that more than 70% of drivers said inflation has “played a part” in signing up onto the platform. Overall, the company’s global driver and courier earner base hit an all-time high of almost five million, beating pre-pandemic levels.
The company’s strong report (while not without some misses) sent the stock up around 15% in the morning, easing some of its year-to-date losses. Rideshare competitor Lyft also moved up more than 10% in sympathy, while delivery company DoorDash gained nearly 4%. Lyft and DoorDash are both slated to report financial results Thursday afternoon.
Investors will be waiting to see whether Uber, which has been chipping toward its “super app” ambitions, is alone in boosting its financial performance during fears of an economic downturn.
“Uber has been able to figure out the balance in this backdrop but many other gig economy players are struggling,” Wedbush analyst Dan Ives writes in an email. “Uber has a global established platform and now finally after years of struggles is hitting its stride, the same cannot be said for others.”
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