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Uber hit by Middle East conflict despite strong bookings

https://www.ft.com/content/da045c04-d3e ... 25a6b1a6=1

Uber posted weaker than expected revenues for the first quarter as its mobility business was buffeted by conflict in the Middle East, but the ride-hailing app set an optimistic outlook with a growing paid membership base.

The San Francisco-based company said on Wednesday that revenues in the first quarter were $13.2bn, slightly below analysts’ estimates of $13.3bn. The knock to its ride-hailing arm was offset by outperformance in the group’s food delivery business.

Uber also said its revenues took a $1bn hit from changes to its business model following a revamp in tax law in the UK that came into effect at the start of this year. It warned that it expected a similar “headwind to revenue” of about $1bn per quarter for the rest of the year.

Uber’s shares jumped as much as 9 per cent in pre-market trading as it forecast better than expected customer spending and profits for the current quarter.

Dara Khosrowshahi, Uber’s chief executive, told investors in prepared remarks that the business had started the year in a strong position “despite a complex macro backdrop” with volatile fuel prices, geopolitical uncertainty and the US experiencing severe weather disruption.

Uber has big ride-hailing businesses in Saudi Arabia and the United Arab Emirates, where major cities have been hit by Iranian attacks since the US and Israel’s war began at the end of February.

The group is not alone in warning investors that it has been affected by the conflict. Rising oil prices have knocked consumer confidence and put discretionary spending under pressure.

Uber has moved aggressively in the past year to compete on price against rivals. It has used discounts to drive bookings and uptake of its Uber One membership scheme, which surpassed 50mn users for the first time in April.

Gross bookings — a measure of customers’ total spending across all its business units — rose 25 per cent year on year in the three months ending on March 31 to $53.7bn, exceeding analysts’ estimates of $52.9bn.

Uber forecast adjusted earnings for the second quarter of 2026 of between $2.7bn and $2.8bn, compared with analysts’ estimates of $2.66bn, according to S&P Visible Alpha. It also projected gross bookings of $56.25bn to $57.75bn, ahead of Wall Street’s previous expectations.

The UK business model changes, which only apply outside London, follow a change in how taxi fares are taxed, which was introduced in November’s Budget.

Uber’s drivers now contract directly with passengers, with Uber acting as an “agent”, allowing the company to shift the expanded VAT liability on to drivers but meaning it recognises a smaller portion of the total fare as its own revenue. Uber remains the “merchant” in London and so is responsible for VAT in its largest British market.

Uber’s chief financial officer Balaji Krishnamurthy said the change was largely an accounting difference that “has no impact on underlying economics”.

Khosrowshahi has been seeking to expand the scope of Uber’s services as he doubles down on a “super app” push, having already tapped food delivery, groceries and shopping. Uber last month unveiled a partnership with Expedia at its annual Go-Get event in New York.

Uber’s net profit for the first quarter was $263mn, weighed down by a $1.5bn “headwind” from its various equity stakes. The company has invested in several publicly listed companies whose shares have slid in the past year, including Singapore-based Grab and China’s DiDi.

The group has been pushing to deploy autonomous vehicles on its network and plans to operate services in at least 15 cities this year. It has committed to spend in excess of $10bn to support the rollout of AV fleets, the FT previously reported.

Like many tech companies, Uber has seen its spending on AI tools rise faster than expected, following the arrival of new and more capable models such as Anthropic’s Claude Code late last year.

“We’re seeing the use of AI just grow at unbelievable rates,” Khosrowshahi said, adding that about 10 per cent of Uber’s code is now written by AI agents.

Krishnamurthy said Uber had “re-upped our investment” in AI. “Candidly, when we set our budgets for 2026 in November, we underestimated the amount of impact the AI tools could have,” he said.

Khosrowshahi brushed off concerns from investors that AI agents could be a threat to Uber’s business, referencing historic fears that online travel companies such as Expedia and Booking.com would be cut out by search engines.

“AI is going to power entirely new experiences but we think the majority of those experiences are going to come direct to us,” he said.

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Waymo explores split with Uber as robotaxi tensions deepen

https://www.ft.com/content/9dcb5d72-13a ... 25a6b1a6=1

Alphabet’s Waymo is exploring options to exit its Uber partnership, with the relationship between the two tech groups souring amid an intense lobbying battle over the future of robotaxis.

The self-driving car company has held internal talks about ending its current deals with the ride-hailing group, which operates services in Austin and Atlanta, according to multiple people familiar with the matter.

Waymo has already notified Uber that it plans to enter these markets independently in January 2028 when their contract allows, the ride-hailing group said in a statement.

The relationship between the two companies, which first partnered in 2023, has deteriorated as they have become increasingly direct competitors in some markets and both lobby for robotaxi legislation that would benefit their own business at the expense of the other.

The two companies were “pursuing diverging objectives”, one person said.

Waymo and Uber have traded complaints, blaming each other for poor service and safety issues in the markets where they work together.

A break-up between the two groups is expected to dent Uber’s autonomous ambitions. It has been racing to make up lost ground after selling its in-house autonomous vehicle arm in 2020, committing more than $10bn over the past year through equity stakes and robotaxi fleet agreements.

Uber’s share price has slid more than 16 per cent in the year to date in part owing to investors’ concerns that the company will be overtaken by AV providers. Its stock fell 4 per cent on the news Waymo might walk away.

Waymo has already made inroads in some US cities and has been eroding Uber’s market share in locations such as San Francisco.

The company operates more than 3,800 vehicles across ten cities. In February, it raised $16bn at a $126bn valuation to fund its expansion.

Waymo first partnered with Uber in May 2023 to launch robotaxis in Phoenix. This was followed by deals in Austin and Atlanta, where Waymo cars are only available through the Uber app, and Uber manages the vehicle fleet with partner Avomo.

In May, Uber and Waymo parted ways in Phoenix after their current deal lapsed. The two companies have also clashed over the quality of Waymo services operated by Uber in Austin and Atlanta.

The Alphabet division has questioned the cleanliness and routing of their vehicles, the people said, while the ride-hailing group has argued that it has been hamstrung in its deployment.

In May, Waymo drew negative attention after dozens of its vehicles clogged a cul-de-sac in Atlanta. Uber was responsible for routing vehicles, the people said.

Uber has meanwhile raised concerns that the deal has unsustainable financial terms, and that Waymo’s vehicles suddenly become unavailable during bad weather. In December, Uber wrote to Waymo following a string of incidents in which vehicles passed stopped school buses in Austin.

Waymo has opted to expand into several US markets without Uber, offering bookings via its own app. It initially plans to offer direct bookings in Austin and Atlanta alongside Uber, similar to its deal with Lyft in Nashville.

Waymo has not ruled out a complete split, the people added. “We believe in a vibrant and collaborative AV ecosystem that champions innovation and provides riders with a choice in how they experience this technology,” the company said in a statement.

Uber plans to offer Waymo services in the two markets until May 2028, when its current contract concludes, the company said.

Tensions have worsened as Uber lobbies state and federal policymakers to enforce so-called “hybrid networks” where drivers and autonomous vehicles operate on the same platform.

In New Jersey, Uber lobbyists proposed that any platform offering robotaxi services also have human drivers provide at least 85 per cent of all rides during a three-year pilot programme.

Analysts say this rule would force AV companies with dedicated apps such as Tesla, Waymo and Amazon-owned Zoox to offer their services via third-party ride-hailing apps.

“Uber is trying to buy time through regulatory capture,” said Grayson Brulte, co-founder of Autnmy AI, a data intelligence firm. “They are simply advocating for measures that will preserve their market share.”

Waymo has supported high permitting costs for new AV operators that would create a barrier to smaller operators, many of which partner with Uber.

Uber said it is false that they are “anti-AV or seeking to slow AV deployment”. It said hybrid networks “get the technology to consumers sooner while giving policymakers a practical framework to manage the transition”.

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IDFIMH