Ride-hailing giant Uber (NYSE:UBER) anticipates robust demand in the holiday quarter, surpassing analysts’ expectations, following adjustments to its accounting practices that impeded growth during the July-September period.
Changes in revenue recognition methods had an adverse impact on the growth of Uber’s ride-hailing and food-delivery segments, causing revenue to fall short of third-quarter projections. The company faces stiff competition from Lyft, which has lowered fares to attract customers amid concerns about ride-sharing demand due to rising inflation.
Nevertheless, Uber’s CEO, Dara Khosrowshahi, expressed optimism, stating, “Consumer demand on our platform remains strong as we enter the busiest time of the year.” He noted, “This trend continued into the fourth quarter as we achieved record-high figures in October for overall trips and gross bookings, driven by robust performance in both mobility and delivery.”
Uber anticipates its fourth-quarter adjusted core profit, a crucial measure of profitability, to fall between $1.18 billion and $1.24 billion, exceeding estimates of $1.15 billion according to LSEG data. Gross bookings, representing the total value of services rendered, are expected to be in the range of $36.5 billion to $37.5 billion, compared to expectations of $36.31 billion.
Analysts at William Blair mentioned, “With a record 6.5 million active drivers and strong driver supply remaining in the third quarter, the company appears well-positioned to deliver impressive results.”
The optimism surrounding travel demand during the holiday season, a critical period for industries ranging from airlines to hotels, is expected to benefit Lyft (LYFT-Q), which is set to report earnings on Wednesday.
In the third quarter, Uber’s revenue grew at its slowest pace since 2021, reaching $9.29 billion, slightly below the $9.52 billion estimated. The adjusted core profit of $1.09 billion exceeded expectations of $1.02 billion, but net earnings per share fell 2 cents short of estimates. After experiencing volatile premarket trading, Uber’s shares climbed more than 2 percent.
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Author Stephanie Bédard-Châteauneuf