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Uber’s results hit by legal costs after decade of regulatory battleshttps://www.ft.com/content/83e4bc2b-4a4 ... cb485bfb37Uber’s results far undershot expectations in the first quarter, weighed down by costs from the ride-hailing company’s decade-long battle with global regulators.
The San Francisco-based company reported operating profit of $172mn for the first three months of the year, compared with analysts’ forecasts for more than $600mn.
Uber on Wednesday attributed the shortfall to “discrete legal and regulatory reserve changes and settlements”, though the company said it was “resolving several legacy matters”.
The legal costs included Uber agreeing to pay $178mn to settle a class-action lawsuit brought by taxi drivers in Australia. However, the quarter still compared favourably with a $262mn operating loss reported for the first three months of 2023.
Uber’s shares slipped about 9 per cent in early New York trading on Wednesday, eroding their gains for the year to 11 per cent.
Uber and its rivals are grappling with increasing global regulatory headwinds, particularly over driver and delivery worker pay.
Under a challenge filed in the UK this month, Uber is facing a multimillion-pound lawsuit from more than 10,000 black cab drivers in London.
The company previously reported that 2023 marked its first full year of operating profitability, which Uber hailed as an “inflection point” in its tumultuous history.
That milestone followed years of steep losses as the company spent billions of dollars fighting ride-hailing rivals.
After investors demanded evidence that the sector could be sustainably profitable, Uber worked to fatten margins and push down costs.
Revenue for the most recent quarter increased 15 per cent to $10.1bn, in line with analysts’ forecasts. However, Uber reported a net loss of $654mn in the three months to March 31, sharply missing estimates from analysts for a net income of about $500mn.
The company said the loss was driven by a cumulative $721mn writedown of the value of Uber’s stakes in other groups, which include self-driving car company Aurora and Chinese ride-hailing business DiDi.
Adjusted earnings before interest, tax, depreciation and amortisation rose 82 per cent from the same period a year ago to a record $1.4bn, beating analysts’ forecasts of $1.3bn. Uber said adjusted ebitda in the current quarter would be between $1.45bn and $1.53bn, in line with analysts’ estimates.
The total value of Uber’s ride-hailing, delivery and freight bookings also came in just below analysts’ expectations at $37.7bn. The company blamed in part softer demand in the Latin American region compared with the same period last year.
However, Uber said demand remained “robust” across its delivery and mobility businesses. Chief financial officer Prashanth Mahendra-Rajah said the company was “exactly where we want to be” in terms of longer term bookings growth. In March, India became the third country globally to have more than 1mn Uber drivers, joining the US and Brazil.
Uber said further growth would come in part from a widening array of services, such as the grocery delivery segment that it aims to expand, while profits would be helped by its growing high margin advertising business.
This week, Uber unveiled a partnership with Instacart, which will allow the grocery delivery group’s US users to order from restaurants listed on Uber Eats. The ride-hailing company hopes the move will help it to compete with rival DoorDash in suburban locations across America.
Analysts at JPMorgan noted that, although Instacart’s grocery capabilities were not being offered by Uber, “we believe this initial step opens the door to the companies potentially working more closely together down the line”.
On Wednesday, Dara Khosrowshahi said: “Make no mistake: we remain committed to executing against our grocery and retail strategy . . . You can expect more news on the grocery front in the coming weeks.”
Uber also said it was confident that it could “aggregate” demand for self-driving vehicles, which are already available in some regions.
Autonomous vehicles would be “great for Uber” and lower prices for consumers, said Khosrowshahi, adding that Uber was “looking to partner with the AV industry”.
During the first quarter, the company started share repurchases under its inaugural $7bn share buyback programme, which Mahendra-Rajah said would “partially offset” the company’s employee stock-based compensation obligations.
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