Uber bets on holiday demand, Q3 revenue grows at $9.29 bn missing estimates
Ride-hailing giant Uber on Tuesday predicted strong holiday-quarter demand would drive up profits more than analysts expect, after accounting changes hampered growth between July and September.
The company’s move to change how it recognizes some of its revenue affected growth at its ride-hailing and food-delivery businesses by eight percentage points and resulted in revenue missing third-quarter expectations.
Uber is grappling with tough competition from Lyft, which has cut fares to gain customers as sticky inflation sparks worries about ride-share demand.
But CEO Dara Khosrowshahi struck an upbeat tone. “Consumer demand on our platform remains healthy as we enter the busiest period of the year,” he said.
“This trend continued into the fourth quarter as we achieved all-time highs in October for overall trips and gross bookings, driven by strength across both mobility and delivery.” Uber expects fourth-quarter adjusted core profit, a key profitability measure, between $1.18 billion and $1.24 billion, above estimates of $1.15 billion, LSEG data showed.
Gross bookings, or the total dollar value earned from its services, is expected in the range of $36.5 billion to $37.5 billion, compared with expectations of $36.31 billion.
“With driver supply also remaining strong in the (third) quarter, at a record 6.5 million active drivers, the company appears well-positioned to generate strong results,” said analysts at William Blair.
Optimism over travel demand during the holiday season, a crucial period for industries from airlines to hotels, will also benefit Lyft, which will report earnings on Wednesday.
In the third quarter, Uber’s revenue grew at the slowest pace since 2021 to $9.29 billion, missing estimates of $9.52 billion.
Adjusted core profit of $1.09 billion beat expectations of $1.02 billion, but net earnings per share missed estimates by 2 cents.
Its shares were more than 2% higher after volatile premarket trading.