Uber released its results for the third quarter of 2020 yesterday, and we learned some interesting things about Uber’s earnings – or lack thereof – plus how delivery has helped Uber recover some of those ridesharing losses. RSG contributor Tyler Philbrook outlines what happened during the quarterly earnings announcement and breaks down how it affects drivers below.
- Rideshare demand is still down, and Uber did not hit investor revenue expectations
- Despite that, Uber CEO says Uber is still on track to break even in 2021
- Delivery made huge gains once again, thanks to demand and marketing efforts by Uber
- Diversification has been key to Uber’s resilience
Uber’s Third Quarter Results: Overall
Uber’s rideshare business did not do as well as expected; however, considering the climate that this company is currently working under, any improvement is good to see.
Uber’s gross bookings declined to $14.7 billion, which is down 10% year-over-year.
Mobility (including rideshare) bookings decreased 50% but Delivery gross bookings increased by 135%.
Mobility revenue declined 53% and Delivery increased by 125%.
Uber also has $7.3 billion unrestricted cash, cash equivalents and short-term investments, on hand at the end of the third quarter. As CNBC explains (emphasis ours), “Overall, Uber lost $1.09 billion on a GAAP basis during the quarter, an improvement from a year ago when their losses amounted to $1.16 billion.”
What does this mean for drivers and riders? Let’s look at them one by one.
Mobility: Rideshare & the Pandemic
The “Mobility” side of Uber is more than just passengers needing rides. It includes scooters, taxi companies, and mass transit that Uber is now doing as well.
One thing that was mentioned several times during the call is that when areas open up from the pandemic, Uber also gets a surge. This makes sense. However, Uber is showing they are having a hard time keeping up with supply.
Uber needs more drivers for the passengers requesting rides. For those of us who have been wanting to get back on the road, that’s great news. (If you are considering driving for Uber, make sure to sign up with an Uber referral code to get guaranteed earnings).
On the conference call, Uber CEO Dara Khosrowshahi confirmed that rides are rebounding, saying, “Uber had improved its position in 11 of the top 15 markets in the United States during the third quarter including New York City, Chicago and Atlanta.”
According to CNBC, Khosrowshahi said Uber rides were coming back faster than other transportation alternatives, including mass transit in many cities and taxis in New York City.
In addition to needing more drivers, Uber has been offering incentives for drivers to get back on the road. If you’ve been hesitant and waiting for a good time to drive, it could be now.
On the call, Uber mentioned something interesting about rideshare. Uber stated commuter times are increasing – not back to normal, but going up, same as requests for weekend and night times. However, they also mentioned seeing ride requests increase during ‘off’ times, or times when drivers wouldn’t typically expect to get a ride.
This could partially be due to Uber’s ‘No Mask, No Ride’ policy. According to Uber, this has been beneficial to Uber’s rideshare side of the business, and they have spent a lot of time educating passengers about safety so they will return to the app. All of this spells good things for the drivers who want to get out there and make some money.
As CNBC reports, Uber’s CEO stated:
“Uber comes back when cities come back. If anything, Uber is an advantaged form of transportation versus others.”
All that said, each area is different. If you live in a city that is on lockdown, you’re not going to get as many rides as someone who lives in a city that is completely open. That just makes sense. If you need to make some money though, maybe Eats is a better option.
Delivery: Uber Eats Results
As mentioned, delivery numbers increased all around in Q3, as expected. In the world we live in, people need and expect things delivered to their doors.
Uber has stepped in not only for delivering from restaurants but also groceries and pharmacies. In quarter three, Uber announced signing a deal with prescription delivery service NimbleRx, to pilot Uber Direct for its pilot prescription drug delivery in Dallas and Seattle.
I drove for Eats at the start of the pandemic, and I was getting so many requests when I picked up someone’s food, I would get the request to pick up the next person’s. It was insane; I had never seen anything like it in my years of driving.
Since then, it has somewhat slowed down, not because of requests but because more drivers are getting out there.
In order to keep those drivers busy, Uber is trying to get into more restaurants. Right now in the US, they are in around 30% of restaurants, and in some markets they are in as little as 5%. Imagine though, if they are in so few restaurants now and making the kind of money they are, if they get in more, how busy will they be?
It’s for that reason that several times they made the comment “delivery will be profitable sometime in 2021”. When asked about the concern of the pandemic ending and those numbers going down, they were convinced that even when the pandemic ends, they would continue to see a rise in requests.
Considering driving for Uber Eats? Now might be a good time to sign up for Uber Eats!
Part of this comes down to marketing: in Q3, you may have noticed all the ‘Tonight I’ll Be Eating’ ads (I see them a lot during football commercials), featuring Mark Hamill, Sir Patrick Stewart and others. This advertising push is currently taking place in the US, and you may also see it on social media and other forms of media. The goal here is get customers on Uber Eats, then have those customers encourage their favorite restaurants to get on the platform as well.
During the Curbivore conference, Harry interviewed Daniel Danker, Head of Product for Uber Eats, about Uber Eats’ impact on Uber’s earnings. They discussed the pandemic’s impact on Uber Eats and how Uber Eats adapted quickly to what was going on – like quickly onboarding drivers and restaurants. You can take a look at the video below:
For drivers, all this means that it’s a great time to get out there and drive for Uber Eats, or delivering groceries, or pharmacy if available in your area.
Here’s a list of the best delivery services to work for.
We broke out Freight separate from Mobility and Delivery mainly because, on the call, Uber was asked how Freight ties into those two sections of Uber’s business, and Uber stated Freight exists in a separate vacuum.
One of the biggest announcement made about Uber Freight was that, according to Business Wire, “Freight announced the launch of Uber Freight Enterprise, which allows shippers to directly place and control their loads within the Uber Freight Marketplace, and Uber Freight Link, which allows shippers to directly and digitally connect to their carrier network.”
Uber did state the technology and data they’ve received from the Uber Freight section of the company has helped, but exists on its own.
As you can imagine, there was a lot of talk about California’s Proposition 22. Khosrowshahi said of the news Prop 22 had passed, “the people listened to the riders.” They feel this is the best option, not to make drivers employees, but to allow them the freedom and flexibility they want and need.
When asked how this would affect both the drivers and the passengers moving forward, Uber said the focus will be on making sure the drivers get their benefits as quickly as possible.
When asked about the additional cost, Uber said they expect it to increase their expenses by about 5% and that most of that will be passed on. They do feel strongly though that the increase in costs will not decrease the number of requests they will receive and that this will be best for everyone.
It’s an understatement that Uber is thrilled about the results of Proposition 22. As Harry mentioned on Twitter, for a ‘small’ investment of $200 million (not all from Uber), gig companies’ market cap is up $8 billion as of the other day.
A ‘small’ investment of $200 million on behalf of the gig companies is likely to pay off manyfold in the coming months. Their market cap was up $8 billion upon last check.
— Harry Campbell (@TheRideshareGuy) November 4, 2020
As CNBC mentions, “Uber shares had skyrocketed on Wednesday and continued climbing Thursday ahead of earnings, after the company’s proposed ballot measure, Proposition 22, won voters’ support in California elections.”
Our Analysis and The Future for Uber
Here at RSG, we can provide unique insight thanks to the thousands of drivers we talk to every year. As Harry extrapolates based on Uber’s quarter three earnings announcement:
“We saw continued growth from Uber in Q3 thanks to Uber Eats and new investments in the service (rider marketing, drivers’ side). However, rides have still not rebounded as quickly as the company would have hoped.
With regards to our audience, we’re not seeing as much demand for rideshare content or onboarding new drivers as we have in the past, which confirms driver supply has not recovered. For drivers willing to hit the road, though, there appears to be an imbalance of supply and demand, meaning rides are abundant even if that means longer wait times for riders.
On the bright side, demand for rideshare seems to recover when cities and businesses open again after pandemic-caused shutdowns. Unfortunately, we could be entering a second wave (or third, in some cases) of the pandemic, which would only further delay the rideshare recovery.”
We have been in crisis mode for so long with this pandemic, it seems odd to think about the future, but that’s what Uber is doing. As a business, they have to keep looking to the future and planning ahead. That’s more difficult right now, given the pandemic and economic uncertainty, but out of all the gig companies we cover, Uber is in one of the best positions in terms of diversification.
Uber has spent billions on acquiring new companies, such as Cornershop, piloting new pharmacy programs, investing in technology with Uber Freight, signing new automaker partnerships and much more.
When asked which side of the company will be the more profitable side, Mobility or Delivery, Uber’s CEO said he couldn’t pick, and that he wanted those two departments to duke it out.
It’s clear Uber will need more drivers to hit the road for all that is to come. Uber is not worried about the current conditions because they have enough cash on hand (over $7 billion) to weather it, and the requests are going up.
If you’ve been on the fence about getting back (or beginning) driving or delivering, now seems like an excellent time to do so!
Readers, what do you think of this quarter’s earnings report? Does it surprise you?
Earn up to $20 an Hour with Postmates!Postmates is growing like crazy right now and offers plenty of no-contact delivery options, from convenience store items, restaurant delivery and more. Sign up here.
Get started as a gig worker today! Learn more:
- Is driving for Doordash worth it?
- Postmates Driver Pay
- Instacart Shopper Pay
- Uber Eats Driver Review
- Best food delivery service to work for
- Rideshare insurance
-Tyler @ RSG