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Uber Technologies Inc. said quarterly bookings from ride-hailing customers declined for the first time ever, a sign that the coronavirus is arresting growth of businesses that have only gone in one direction.
The San Francisco-based company has never turned a quarterly profit, but it inched closer to that goal in the quarter. Uber’s first-quarter loss excluding taxes, interest and other expenses declined 30 percent from a year ago to $612 million. That was better than an average of analyst estimates compiled by Bloomberg.
However, its net loss in the quarter was $2.9 billion, which included a $2.1 billion pretax writedown of the value of some of Uber’s minority investments.
One bright spot was food delivery, which helped offset the drop in rides. Homebound customers drove a 52 percent increase in food delivery gross bookings to $4.68 billion in the first quarter. Gross bookings from rides, a measure of the total value of fares that’s closely watched by investors, dropped 5 percent to $10.9 billion. A year earlier, growth was more than 20 percent.
Shares of Uber were up 8.6 percent to 33.60 in after-hours trading Thursday.
“While our rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet,” CEO Dara Khosrowshahi said in a statement. “Along with with the surge in food delivery, we are encouraged by the early signs we are seeing in markets that are beginning to open back up.”
Khosrowshahi told analysts on a conference call that ride bookings in the United States rose last week on a weekly basis, adding that the goal of profitability would be delayed by a matter of quarters. Uber had originally promised to be profitable on an adjusted basis before interest, taxes, depreciation and amortization by the end of this year, but withdrew its full-year guidance on April 16, citing the uncertainty surrounding the global virus outbreak.
The problems last quarter for Uber’s rides business, and for most of the transportation industry, can be traced to the spread of the virus around the world. With the stock under pressure in the first quarter, Khosrowshahi sought to reassure investors on a conference call explaining the business would have a $4 billion cash cushion in a worst-case scenario.
Uber is a major investor in Didi Chuxing, the largest ride-hailing operator in China, where the virus originated. By April, Uber withdrew its financial forecast for the year and said it would take a significant charge on investments.
During the past week, Uber has embarked on a blitz of cost-cutting moves. Uber said it will end food delivery operations in seven countries and that its Middle East unit Careem will terminate 31 percent of employees. On Wednesday, the company told employees it was cutting 14 percent of staff and indicated that more cost reductions would be conveyed in the next two weeks. Uber said Thursday it will transfer its bicycle and scooter business to Lime and invest more capital in the startup.
Even as Uber is hustling to cut costs, a new threat has emerged. Its home state, California, sued Uber and its peer, Lyft Inc., this week alleging that they are violating a law enabling their drivers to reap employee benefits. If they lose the case, the companies face substantial new costs that will alter their business models in California and could embolden other governments to take similar actions.
Reuters contributed to this report.