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Uber’s Bullish on Profit as Ride-Sharing Bounces Back in 2023

Uber Technologies Inc made a prediction regarding their quarterly core earnings that exceeded estimates on Tuesday. This was a result of a surge in demand for travel and food delivery services, which helped the U.S. ride-sharing behemoth to report better-than-expected results for the January-March period. As a result, shares of the company rose by 7%, leading to minor gains in the stock prices of rival firm Lyft Inc (NASDAQ:LYFT), which is set to report its earnings on Thursday.

Uber (NYSE:UBER) has been able to take advantage of its dominant position in crucial global markets as travel rebounds from the pandemic-induced lull. In addition, a rise in the number of people seeking additional income has enabled Uber to provide lower incentives to gig workers, according to analysts.

“Our clear lead on driver preference has allowed us to better serve this growing demand: 5.7 million drivers and couriers earned $13.7 billion (including tips) on Uber during the quarter, both all-time highs,” stated CEO Dara Khosrowshahi. He also stated that after a lackluster performance in the past two years, “the rideshare category in the United States and Canada is now growing faster in 2023.”

For the June quarter, Uber is anticipating adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of between $800 million and $850 million, compared to Refinitiv’s analysts’ prediction of $749.1 million. The company has declared that it is on track to achieve operating income profitability this year and is maintaining its workforce at a flat rate after a sequential decline in headcount in the first quarter.

Oppenheimer & Co analyst Jason Helfstein remarked, “Return to work/travel tailwinds are causing mobility to outperform ‘normal’ 1Q seasonality,” and further noted that increased driver density and trips were enhancing the fee Uber receives on transactions. Uber also predicted gross bookings of between $33 billion and $34 billion, compared to expectations of $33 billion.

Uber’s first-quarter revenue increased by 29% to $8.82 billion, surpassing estimates of $8.73 billion, thanks to a 72% surge in the ride-hailing segment. The revenue growth of the food delivery unit exceeded expectations at 23%, and Uber anticipates “strong growth” in the upcoming quarters. Uber’s highest adjusted EBITDA on record was $761 million, while the adjusted loss per share of 8 cents was narrower than anticipated.

With regard to competition with Lyft, Uber’s Khosrowshahi stated during a post-earnings conference call that “they’re looking to price competitively with us” but “the days of paying for share and essentially using shareholder money to buy share temporarily, those days are over.” Lyft has been forced to become more disciplined with driver incentives, prompting Uber to do the same and improving its margins, according to Oppenheimer’s Helfstein

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