Is Uber’s current business model unsustainable? They had a large jump in revenue but are still falling under the “not profitable” umbrella…is it time for a change in strategy? This and more in this week’s roundup with senior RSG contributor Paula Lemar.
Uber revenue jumps 72% on strong demand for rides (CNN)
Summary: If a recession is looming, you wouldn’t know it from looking at Uber’s business.
Uber on Tuesday reported $8.3 billion in revenue for the three months ending in September, a 72% increase from the prior year, fueled by strong demand for rides and meal deliveries even as inflation and recession fears weigh on consumers.
The company’s mobility segment, which includes its ride-hailing business, saw revenue grow 73% from the prior year to $3.8 billion for the quarter. The number of trips during the quarter grew 19% to 1.95 billion, representing an average of approximately 21 million trips per day.
Uber’s revenue from its Eats delivery business, meanwhile, increased 24% from the prior year to $2.8 billion….
My Take: At the very end of the article it states, “Uber reported a net loss of $1.2 billion, which it said was primarily due to investments.” So, that to me says that they are still settling into what they need to do to make money.
With revenue jumping significantly with a strong demand for rides, they should be able to turn a profit sooner rather than later, right? Well, that depends on a lot of factors. And, in the next article, you’ll see that there was a whistleblower at Uber and that person firmly states that Uber’s current business model is unsustainable, which would hint that it’s not going to be profitable either.
Uber whistleblower says current business model ‘absolutely’ unsustainable (Reuters)
Summary: Mark MacGann, the whistleblower behind the so-called Uber Files, said on Wednesday that the ride-hailing company seemed to be taking steps toward improving its work culture, but that its business model was still “absolutely” unsustainable.
The Guardian and Le Monde newspapers reported in July that Uber Technologies Inc (UBER.N) broke laws and secretly lobbied politicians as part of an aggressive drive to expand into new markets from 2013 to 2017.
MacGann, who led Uber’s lobbying efforts to win over governments, identified himself as the source who leaked the more than 124,000 company files.
MacGann said he decided to speak out because he believed Uber knowingly flouted laws and misled people about the benefits to drivers of the company’s gig-economy model….
My Take: RSG’s Facebook page brought one response that stated, “I like being a 1099 independent contractor. There must be an opt out included with any attempt to organize.”
We’ve gone through this several times over the years…the majority of drivers seem to want to be called independent contractors but also have the benefits of an employee.
There have been movements in California and Massachusetts among others for Uber and Lyft, etc. to set up different models of business that will, in essence, dodge the need to pay taxes for having employees while promising more than what the companies have offered traditionally. But what change (or changes) are the best for both the company and the gig worker? That remains to be seen.
Waymo’s robotaxis are now making passenger trips to the Phoenix airport (The Verge)
Summary: Waymo is ready to tackle the chaos of airport drop-offs and pickups in Phoenix. The Alphabet company says it is the first autonomous vehicle company to include a busy metropolitan airport in its service area. The company had previously only offered airport trips to its employees with safety drivers behind the wheel.
Expanding its service area to include Phoenix’s Sky Harbor International Airport represents a potential moneymaking opportunity for Waymo, with the company noting that airport trips account for an estimated 20 percent of manually driven ride-hail cars. AV companies are under intense pressure to begin generating revenue as the industry shrinks, tech stocks plummet, and economic forecasts look gloomier.
AV companies are under intense pressure to begin generating revenue….
My Take: On RSG’s Facebook page, responder Mike said, “I have been a Phoenix area rideshare driver for a while. I am quite familiar with our airport. I can say this is going to be a big mess unless they give them designated areas. I have seen these cars stop in the middle of the road and impede the flow of traffic waiting for passengers many times.”
These are exactly the kinds of issues that drivers have been citing for years. How will a driverless vehicle be able to handle no-shows, not being in the right spot for the passengers, pulling over on busy roads for pickups and drop offs? There are endless scenarios where a human brain and intuition are needed to make an actual decision.
Also in the news…
Taxi fares outside London could rise by a fifth if Uber wins court case (The Guardian)
Thoughts: While this is affecting London, not the U.S., it is always interesting to see the dynamics between Uber and taxis, including how they are regulated. They are such similar beasts, it seems like they should follow the same standards, including any fees or permits required to work.
Uber features a new Driver and Courier Learning Center playlist on YouTube (YouTube)
Thoughts: Check out this playlist! It’s got tips and tricks for drivers and couriers. This is the kind of thing I wanted when I first started so I could see the basics before hitting the road. If you’re new to Uber driving and haven’t started your first trip yet, check out this tutorial on how to take your first trip:
Would you have found these tutorial-style videos helpful when you first started out?
-Paula @ RSG