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Ride-Hailing Seems To Be Making A Comeback But Drivers Seem Hesitant

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Ride-Hailing Seems To Be Making A Comeback But Drivers Seem Hesitant

Last week, Uber Technologies Inc (NYSE: UBER) and Lyft Inc (NASDAQ: LYFT) showed they are seeing improvement in ride-hailing that was strangled by the COVID-19 pandemic.

Uber Was Saved By Its Food Delivery Business

Uber's first-quarter results come after it announced March was the best month in the company's nearly 12-year history, as its mobility business reported the most bookings since the start of the pandemic and delivery demand exceeded driver supply.

Q1 Figures

Revenue for the quarter came in at $2.9 billion which was below analysts' estimates. Uber had to deal with a $600 million UK charge, which is merely a glimpse of the costs it could face if it were it is forced to treat its US gig workers as employees. This time, it had to settle with its more than 70,000 UK drivers. During the first quarter, Uber had 3.5 million active drivers and food-delivery workers on its platform, the majority of whom work in the United States.

Excluding that charge, Uber reported $3.5 billion in revenue, up 8 percent YoY. As has been the case for most of the pandemic, its delivery division accounted for the bulk of sales, at $1.7 billion, a 230% increase from the first quarter of 2020. A one-off, $1.6 billion windfall from the sale of its self-driving division helped the company come within touching distance of a profitable quarter, recording a net loss of $108 million, compared with $2.9 billion in the same quarter a year ago.

Uber recorded $19.5 billion in gross bookings which is the total value of all transactions, marking a 24 percent increase compared to the same period last year which was marked by the early days of the pandemic.

Uber's preferred measure of performance and the one it promised to be profitable on by the end of the year, adjusted EBITDA, also came in ahead of analysts' expectations, with a $359 million loss, 41 percent better than a year ago.  Narrowing losses by nearly $100 million from the previous quarter, it is important to note this figure excludes one-time costs such as stock-based compensation.

Ride-Hailing Improvements

In April, Uber's gross ride-share bookings in the US increased 5 percent month on month. Also, executives shared data from two of its largest markets for rides and delivery, namely Sydney and New York, that revealed delivery gross bookings were still elevated even after reopenings, which boosted rideshare demand. Uber recorded 98 million active users, whether for rides or food which is a 5 percent increase from the previous quarter but 5 percent lower than the same period last year.

Incentives For Drivers

In addition to distributing free personal protective equipment, Uber announced last month it would spend $250 million as a one-time stimulus to get drivers who are hesitant to ferry passengers over food back on the road.

Lyft's First-Quarter Results Exceeded Expectations

Lyft is handing out similar incentives as it will use its cut from elevated pricing to fund investments to bring back more drivers. But, unlike Uber, it managed to beat on the top and bottom lines and exceeded Wall Street's rider expectations for its first quarter.

Purely ride-hailing company generated $609 million of revenue that resulted in a loss per share of 35 cents. After deducting $180.7 million of stock-based compensation and related payroll tax expenses, net loss for the quarter amounted to $427.3 million whereas net loss margin was 70.2%. One year ago, it amounted to 41.7%.

Adjusted EBITDA loss was $73 million whereas the adjusted EBITDA loss margin was 12%, compared to 8.9% in the same quarter in 2020 and 26.3% in the previous quarter, the fourth quarter of 2020.

It is important to highlight that YoY comparisons don't adequately show the company's progress since Covid-19 pandemic took hold of the world and severely restricted travel. For example, revenue is down 36% YoY but it increased 7% from the fourth quarter.

Outlook

Lyft reaffirmed its expectation that it will reach sustained adjusted profits on an adjusted EBITDA basis by the third quarter of the year. It also issued guidance for its second quarter, with revenue expected in the range between $680 million and $700 million, which is a 12% to 15% increase quarter over quarter and YoY growth between 100% and 106%. Adjusted EBITDA loss is expected in the range between $35 million and $45 million.

Strategic Move To Advance The Profitability Timeline

Lyft sold off its self-driving car unit to a subsidiary of Toyota Motor (NYSE: TM), Woven Planet, for $550 million in cash. This deal is great news for its profitability timeline as it is expected to eliminate $100 million of annualized non-GAAP operating expenses on a net basis.

Outlook – Driver Supply Shortage

Although recovery will take time, as Covid vaccines roll out, state restrictions are lifted, and people feel more comfortable returning to work or traveling, transit companies are slowly showing signs of recovering. Moreover, Uber is confident that its business will benefit from the complementary nature of two of its large core opportunities even in a post-pandemic world as it intertwined its ride-hailing app with its delivery business.

With a resurgence in users, both companies are facing a growing need for more drivers. Lyft executives said they expect issues around supply and demand to continue in the second quarter and ease in the third. Uber executives expect ride-hailing business to bounce back as vaccinations pick up but they also acknowledged the business is facing the same imminent challenge: not enough drivers.

This article is not a press release and is contributed by a verified independent journalist for IAMNewswire. It should not be construed as investment advice at any time please read the full disclosure. IAM Newswire does not hold any position in the mentioned companies. Press Releases – If you are looking for full Press release distribution contact: press@iamnewswire.com Contributors – IAM Newswire accepts pitches. If you're interested in becoming an IAM journalist contact: contributors@iamnewswire.com

The post Ride-hailing Seems To Be Making a Comeback But Drivers Seem Hesitant appeared first on IAM Newswire.

Image Sourced from Pixabay

 

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