Uber reports massive losses, to lay off 3,700 employees

Uber Technologies Inc’s ride service bookings slowly recovered in recent weeks as the company expects a coronavirus-related slowdown will delay the goal of becoming profitable by a matter of quarters, not years, Chief Executive Dara Khosrowshahi said on Thursday.

He spoke after Uber reported it had seen encouraging signs in markets hit by the pandemic and posted a 14 percent rise in revenue for the first quarter, supported by a jump in food-delivery orders at its Uber Eats business.

Khosrowshahi said stringent cost cutting, to the tune of more than $1 billion (808 million pounds) in 2020, would ensure the company stayed on track. Uber on Wednesday said it would lay off 3,700 full-time employees, or roughly 17 percent of its head count.

The company, which makes the bulk of its revenue through ride-hailing, said trip requests had dropped 80 percent globally in April, but were slowly recovering. In the United States, Uber’s most important market, ride requests were up 12 percent last week from their lowest point in April.

In large cities in Georgia and Texas, US states that have reopened parts of their economy in recent weeks, trips were up around 45 percent from their low point in April, Uber said.

Global lockdown orders aimed at curbing the spread of the virus were a silver lining for Uber’s loss-making food delivery unit, with many new customers and restaurants signing up for the service as eateries were shuttered.

Uber recorded $3.54 billion in total revenue for the first three months of the year, roughly in line with analyst estimates, but still posted a $2.9 billion loss in the period. That included a $2.1 billion pretax writedown of the value of some of Uber’s minority investments.

Shares of Uber rose 3.8 percent in after-hours trading. The stock gained 11 percent during regular trade on a stronger-than-expected performance by smaller ride-hailing rival Lyft Inc, which reported first-quarter results on Wednesday.

Quarterly revenue from restaurant food deliveries rose by more than 50 percent to $819 million on a yearly basis, but yearly revenue growth at the unit decelerated significantly from the previous quarter.

Uber’s food delivery business has traditionally been a drag on the company’s bottom line due to heavy spending on customer promotions and driver incentives.

Uber Eats recorded a $313 million loss in adjusted EBITDA in the first quarter, reducing losses by 32 percent from the previous quarter. The company said it expected a similar loss in the second quarter.

Analysts welcomed the jump in delivery orders, but cautioned it could be a one-off trend during the pandemic.