Uber’s 2024 earnings forecast falls short of expectations, shares fall

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Delivery bags with Uber Eats logos are seen on a street in central Kiev, Ukraine May 27, 2020. REUTERS/Valentyn Ogirenko/File Photo

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Feb 10 (Reuters) – Uber Technologies Inc (UBER.N) reported 2024 operating profit of $5 billion below analysts’ estimates, sending its shares tumbling 4% on Thursday, even as the company carpooling revealed several strategies to increase ridership and reduce costs.

The forecast is lower than the $5.7 billion expected by analysts for 2024, according to data from Refinitiv. The stock reversed course after rising 5% earlier in the day.

Speaking at the company’s first Investor Day, Chief Financial Officer Nelson Chai said Uber would earn about $5 billion in adjusted earnings before interest, taxes, depreciation and amortization, a measure that excludes one-time costs, primarily stock-based compensation.

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“We think that’s a worthwhile goal. Could there be a benefit? Absolutely, but let’s work on that goal for now,” Uber CEO Dara Khosrowshahi said.

The company also expects to report gross bookings of between $165 billion and $175 billion in 2024, Chai said.

Analysts had forecast gross bookings of $169.73 billion, according to Refinitiv data.

Vertical Research Partners analyst Jeff Kauffman said “2024 looks like conservative revenue growth,” but he added that some of the money Uber is investing in new ventures will pay off with a higher profitability after 2024.

Speaking at an in-person event in New York that was streamed live, company executives said they plan to better merge its two platforms – public transit and food delivery. – in a single economic market.

Khosrowshahi said a better mix of its transportation and delivery businesses would reduce customer acquisition costs — a move investors are watching closely in a market where companies have long competed by outbidding each other with discounts. and costly customer incentives.

The company is also changing its algorithms to ensure more workers sign up for both transportation and delivery services, Khosrowshahi said, adding that it would improve driver dispatch and enable greater utilization of each worker.

But Uber’s senior vice president for mobility, Andrew Macdonald, said the company also needed to lower prices to grow its customer base.

“Most of our total addressable market exists below UberX’s current price,” he said, referring to Uber’s standard ride option.

In the United States, public transit prices have soared in recent months as Uber and its smaller competitor Lyft Inc (LYFT.O) struggle to meet a resurgence in demand as they fight to bring back drivers who left their rigs during the pandemic.

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United States freight rate chart: https://tmsnrt.rs/3HGTB6l

Macdonald said the company still has a large pool of untapped customers in the global markets it operates in, with only a small portion of each country’s adult population using Uber on a regular basis.

Reuters Charts

Chart on Uber’s global market share: https://tmsnrt.rs/3szFKsg

Since Uber went public in May 2019, its shares have been on a rollercoaster ride, nearly halving at the onset of the pandemic in early 2020, when the company’s hail transportation business came to a halt. brutally.

The company is trying to turn a corner and hopes to capitalize as pandemic restrictions ease in many of its major markets.

Food delivery orders, which have become a lifeline for Uber and have tripled since the start of the pandemic, have not been affected by the reopening of countries. Uber executives said its Eats business offers plenty of opportunities to cross-sell customers and get them interested in rides and other products.

Khosrowshahi said while Uber is focusing heavily on sequencing its business, it will also place more emphasis on growing its membership program, Uber One, in the future.

Uber executives also said they were addressing regulatory challenges surrounding the status of their drivers.

Last year, Reuters exclusively reported that US Labor Secretary Marty Walsh said many gig workers should be classified as “employees” who deserve benefits, instead of remaining independent contractors. without benefits. Such a reclassification would threaten the business model of concert companies.

Uber’s senior vice president of public affairs, Jill Hazelbaker, said Thursday that the company has established a “very collaborative relationship” with Walsh.

“At this time, we don’t see federal independent contractor regulation on the agenda,” Hazelbaker said.

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Reporting by Tina Bellon in Austin, Texas and Nivedita Balu in Bengaluru; Editing Tomasz Janowski and Bernard Orr

Our standards: The Thomson Reuters Trust Principles.

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