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Uber profit falls short after $479mn legal charge despite strong growthhttps://www.ft.com/content/9ceb0184-79d ... ea3d3909d8Uber posted weaker than expected third-quarter profits on Tuesday after taking a one-off legal charge of almost $500mn, while trying to reassure investors it is entering the busy festive season with “exceptional momentum”.
The number of Uber customers who took a ride in a given month topped 150mn for the first time during the three months to September, as quarterly revenue grew 20 per cent year on year to $13.5bn.
Gross bookings in the quarter — a measure of customers’ total spending across all its business units — exceeded analyst estimates, coming in at $49.7bn.
“We enter the busiest period of the year with exceptional momentum and expect to again deliver another quarter of strong top-line performance,” chief executive Dara Khosrowshahi said.
The company expects gross bookings for the fourth quarter, which includes the festive travel period in key markets such as the US and Europe, to be between $52.25bn and $53.75bn. Analysts had previously estimated the figure would be $52.4bn.
But while operating profits rose 5 per cent to $1.1bn in the latest quarter compared with the same period a year ago, the figure missed consensus forecasts of $1.6bn, largely because it was forced to set aside $479mn for potential legal and tax settlements.
Uber declined to provide specific details on this legal “reserve”, saying only that it related to “significant legal proceedings or governmental investigations related to worker classification definitions” or charges arising from tax probes. These were “unpredictable in both magnitude and timing”, it warned.
Uber’s net income, however, jumped by 154 per cent to $6.6bn, largely due to a one-off $4.9bn benefit from tax credits that were accrued when the company was lossmaking, as well as a $1.5bn boost from its equity investments.
Shares in Uber closed down 5 per cent on Tuesday, after comments from its CEO that its push into autonomous vehicles would take “a few years” to make money.
The company’s shares have been up more than 50 per cent in the year-to-date, amid strong investor appetite for tech stocks during an artificial intelligence boom.
Uber is balancing a host of investments in autonomous vehicles and AI as it undertakes a strategic pivot aimed at diversifying its revenue streams.
Khosrowshahi on Tuesday outlined six areas of “strategic focus”, including plans to expand further into the global grocery and retail market, while also encouraging drivers and delivery riders to switch between roles and even complete assignments for the company’s new AI data unit.
Uber launched a pilot last month that will see some drivers in the US given the option to complete tasks including data labelling to help train AI models for corporate customers.
Khosrowshahi said that the company would also do more with fleet partners as it increased the number of robotaxis deployed on its platform. It has signed deals with more than a dozen autonomous vehicle providers including Alphabet’s Waymo to roll out autonomous vehicles in US markets including Austin, Atlanta and Phoenix.
Uber said last week that it would launch robotaxi services in San Francisco next year after committing to purchase at least 20,000 vehicles from electric-car maker Lucid and AV start-up Nuro.
On a call with analysts, Khosrowshahi said that Uber planned to “lean in with our balance sheet early on” to build up fleets of autonomous vehicles (AVs) on its app but that he ultimately believed private investors would bear those upfront capital costs, as robotaxis scale up.
“As we’re building out our supply base, we’ll lose money in AV,” Khosrowshahi said. “I expect that AV won’t be profitable for a few years.”
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