Heavy spending on driver incentives weigh on Uber’s performance

Uber Technologies Inc updates

Heavy spending on incentives to address driver shortages weighed on Uber’s rideshare business, dragging down its overall performance as it continues to deal with the effects of the pandemic.

Uber’s adjusted earnings before interest, tax, depreciation and amortisation — the company’s preferred metric for the health of its underlying businesses — came in well below analysts’ predictions.

The company’s shares fell by more than 7 per cent in after-hours trading.

For the April-June period, Uber posted an adjusted ebitda loss of $509m, an improvement of $328m on the same period last year but worse than the $325m loss Wall Street had expected.

The company’s take rate — the share it takes of each trip — for rideshare was 18.7 per cent. Analysts had expected more than 20 per cent, according to FactSet.

“In Q2 we invested in recovery by investing in drivers and we made strong progress, with monthly active drivers and couriers in the US increasing by nearly 420,000 from February to July,” said Dara Khosrowshahi, Uber’s chief executive.

Expecting incentive spend to ease up, the company reiterated its goal of posting positive ebitda for a quarter by the end of the year. Lyft, its largest rival in the North American market, achieved the milestone on Tuesday, three months ahead of its own guidance.

Uber’s investments in China’s Didi and autonomous technology company Aurora helped the rideshare group post its first quarterly profit as a public company.

Uber reported $1.1bn in net income for the second quarter, which it credited to previously unrealised gains in both of those companies, according to figures released Wednesday.

However, the value of Didi was calculated as it went public at the end of June, before its share price plummeted following Beijing’s privacy crackdown, making future revaluations possible.

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