With second quarter earnings of $9.2 billion, Uber celebrated its first-ever quarterly net profit, even as the growth rate in revenues slipped to its lowest level since travel's rebound from COVID-19 began.
In a Tuesday morning call with investors, CEO Dara Khosrowshahi touted the news as a validation of the ridesharing and delivery company’s business model. He also spoke about the value added through Uber’s use of machine learning and opportunities in travel tour operating markets.
But the numbers came first. Though lower than recent quarterly rates, the 14% growth in revenues for the period ending June 30 was enough to generate a net profit of $394 million — compared with losses of $2.6 billion last year and $187.6 million in the first quarter of this year when Uber reported a 29% increase in quarterly revenue, to $8.8 billion.
“For most of our history, ‘profitable’ wasn’t the first thing that came up when you asked someone about Uber,” Khosrowshahi said. “In fact, many observers proclaimed over the years that we would never make any money. … But we knew they were wrong about Uber, as did many of our investors who backed us over the years.”
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The good news for Uber was shared with its 6 million drivers and couriers, who earned a record $15.1 billion during the quarter, Khosrowshahi said.
Some other highlights: Gross bookings were up 16% from the same period last year to $33.6 billion. The adjusted EBITDA of $916 million was $552 million higher than last year. Sales and marketing costs for the quarter were $1.2 billion, matching spending for the same period last year.
Ride-hailing drove the company’s earnings for the quarter, with revenue rising 38%. Gross bookings for delivery increased 14%, but freight service was down 30%. Total costs and expenses were also up for the quarter, by 12% from last year as the company spent more on incentives to lure back drivers.
Uber has been introducing more travel-related features since unveiling Uber Travel, which imports flights, hotel and restaurant reservations into the Uber app to simplify ride bookings. In the United Kingdom in May, Uber added flight booking functionality to its app powered by Hopper, joining the company’s existing multimodal content in the U.K. that includes rides on the Thames with Uber Boat, and intercity rail and coach tickets, including Eurostar.
Asked about those initiatives, Khosrowshahi said he saw an opening to do more.
“That tour operator market in the U.K. is a very, very large market that we can go after,” he said.
“You look at tour operators in the U.K. that are providing, for example, coached transport to airports, etcetera. Travel is a very important ecosystem for us, both in terms of pickups and drop-offs, and we have a very significant audience of international travelers and U.K. travelers. We said, ‘Hey, why can’t we go after this tour operator market?’ Essentially, we are building up services that we think rival traditional tour operators with, what I would call, the Uber delight: We already know who you are, we know your identity, we know your payment.”
Concerns that branching more into travel services would overwhelm app users with too many options have been largely alleviated by applying machine learning to Uber’s growing user data, Khosrowshahi said.
“What we’re seeing more recently with the power of machine learning, we can offer the right product to the consumer at the right time,” he added. “So when we know it’s your morning commute on a Tuesday, we don’t offer you the Eurostar. But when we think that you might be open to new and different ways of using Uber, we want to be kind of your operating system for everyday life. Not just for you to go to work but to be that travel companion as well.”