March 2, 2024

Uber Technologies UBER 15.98%

showed its investors the money on Tuesday, reporting a first quarter with positive free cash flow.

For a company that posted operating losses of more than $3 billion and burned through $2 billion in cash in 2018, that’s quite a feat. Investors sent shares up nearly 15% in morning trading after Uber‘small

UBER 15.98%

report, which largely showed strength in driving share, easing growth in delivery and high take-up rates across the board contributed to a significant success.

To be sure, Tuesday’s results suggest that CEO Dara Khosrowshahi meant business when he told employees in May of his intentions to respond to what he called a seismic shift in the market with some seismic changes of his own.

Investors were clearly eager to infer good things about Uber‘small

competitors based on Tuesday’s news: Shares of Lyft and DoorDash rose 11% and 4%, respectively, ahead of their own second-quarter earnings reports on Thursday. Those results will reveal how much of Uber’s outperformance was due to Mr. Khosrowshahi’s shrewd management and how much to a booming industry.

Uber said on Tuesday that its trips were up 12% in the second quarter compared to the same period in 2019. Compared to the fourth quarter of 2019, however, just before the onset of Covid-19, trips were still decreased by about 2%. That doesn’t bode as well for Lyft, which previously said on its first-quarter conference call that its ride volume was down about 30% from fourth-quarter 2019 levels, suggesting it still needs a lot of recovery. A recent note from Gordon Haskett’s Robert Mollins showed that second quarter rideshare trips across the industry in New York were still down 17% even compared to the second quarter of 2019.

In addition to high ride prices, at least part of Uber’s outperformance in mobility revenue came from a change in how it represents its transportation business in the U.K., where Lyft does not compete. And bottom-line performance appeared to be boosted by a growing mobility adoption rate of 26.6% in the quarter — more than 7 percentage points higher than three years ago.

Uber also said its heavy investments in its driver offering paid off, reporting a record earnings base of drivers and couriers of nearly five million at the end of the second quarter. Uber also said it recorded record monthly active platform consumers across its businesses, totaling 122 million.

Uber Eats’ results also make comparisons difficult. On the bright side, Uber said U.S. and Canadian gross bookings in the quarter for its delivery business rose 21%, including Postmates, roughly in line with what Wall Street figures for the competitor’s gross order value growth. DoorDash for the second quarter. But Uber also said gross bookings for its international delivery business fell 5%, weighted by negative currency – a growing factor for DoorDash as it has focused this year on further expansion in Europe.

Overall, Uber said it is experiencing slower category growth, leading to third-quarter gross delivery bookings roughly flat sequentially. This is all a very bad sign for a more international delivery business like Just Eat,

which is due to announce half-year results on Wednesday. Jet, which is based in Amsterdam, is relying on strength in its European operations to offset the lackluster performance of its US-focused platform Grubhub.

With that in mind, even Uber investors shouldn’t expect a similarly outsized third-quarter encore performance. Ride-hailing appears to be making a comeback, thanks in part to the return of carpools and airports, and slowing delivery growth shows there’s only so much consumers are willing to pay for to avoid getting into their cars to receive. The median of Uber’s overall booking guidance for the third quarter was actually slightly lower than what analysts had predicted.

Slower growth in this market means Uber has no choice but to maintain cash flow.

After weathering the pandemic, ride-share companies like Uber and Lyft are now facing a new world of high inflation, driver shortages and declining ridership. WSJ’s George Downs explains what they do to try to survive. Illustration: George Downes

Write to Laura Forman at

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