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Uber Eats grows 89% as Rides take a hit

Uber’s gross bookings for rides fell 3% YoY, but its food delivery business Uber Eats grew 54% YoY. In contrast, gross bookings for rides grew 28% YoY in Q4FY19. Uber’s net loss for Q1 was $2.9 billion. Trips and gross bookings declined 40% in mid-March. Rides bookings fell by 80% in April, but there has been week-on-week growth globally for the past three weeks. Some markets are expected to see recovery and others will see a retreat. Hong Kong, for instance, is back to 70% of pre-crisis gross bookings.

  • Monthly Active Platform Users: 103 million, fell marginally by 7.2% QoQ, up 11% YoY
  • Gross bookings for Rides: $10.8 billion, fell 19.5% QoQ, fell 5% YoY
  • Gross bookings, Eats: $4.6 billion, up 7% QoQ; up 52% YoY

Uber has cut costs by laying off 14% of its staff (3,700 employees) and has offloaded its scooter and bike sharing division Jump to Lime. It has also exited 8 unprofitable Eats markets: Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Uruguay and Ukraine, and transferred Eats operations in UAE to Careem. It had also divested Uber Eats to Zomato in India. Recruitment is unlikely to pick up at the same levels even after recovery of business.

Growth in Uber Eats: The company is leveraging Eats, which grew by a whopping 89% YoY in April (excluding India), driven by Europe, Middle East, and Africa (EMEA), and by Latin America. Uber believes this is where it has an advantage over ride-only aggregators.

An increasing number of Rides customers are using Eats, and new customers are coming in. Along with customers, drivers are also moving to Eats and grocery delivery, the company said. 40% of Uber Rides’ drivers in Canada and US are now working on Eats deliveries in April. Eats is still not fully optimised on supply, and Uber is still signing up restaurants, Uber CEO Dara Khosrowshahi said.

While big brands like Dunkin’ Donuts help onboard customers, small and medium restaurants still account for the vast majority of Eats’ volume. Gross bookings from small and medium restaurants increased 3 times more than from larger restaurants from February to April.

Grocery deliveries is expanding: Uber has signed an agreement to buy a majority stake in Latin American grocery player Cornershop. “From early March levels, grocery and convenience gross bookings increased 117% over the same period,” Khosrowshahi said.

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Recovery in Rides: It’s worth noting that rides to and from airports make up 15% of Uber Rides, but that recovery will take longer, as international travel has plummeted. With regard to recovery in Hong Kong, it’s unclear if that uptick is coming from people that would typically use public transport. It’s too early to say, since even the recovery is uneven. “I’m talking to many of our U4B customers. They are expressing some consternation at bringing back their employees and using public transport,” Khosrowshahi said. An uptick is expected in Uber for Business, since offices will look at transporting their employees to and from offices.


Earnings Call Transcript | Financials 

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