Uber Technologies Inc.’s cost discipline, combined with improved demand despite the weak economy, and the ride-hailing app company is actually talking about GAAP profits later this year.
reported fourth quarter results that exceeded Wall Street’s expectations, with revenue soaring 48% to $8.6 billion, up from $5.8 billion a year ago, and higher than the Factset consensus of $8.5 billion, as consumers continued to use Rides, or the mobility service, which saw revenue grow 31% in the quarter.
“Despite any macroeconomic uncertainty, I’m more confident than ever in our prospects,” Uber Chief Executive Dara Khosrowshahi told analysts on a conference call. “We’re entering the year with great momentum and mobility trip growth is accelerating and delivery remains resilient but we are far from complacent.” He added that the company would aim to deliver another record year in 2023.
Deliver, which includes Uber Eats, is starting to slow down, as more people go out to eat and life has returned to some normality since the pandemic. Delivery grew 6%, but Khosrowshahi noted it was still growing faster than the rest of the industry. “The delivery category has been pretty resilient post-pandemic, certainly more so than a lot of other categories that that benefited from the pandemic,” he said.
Uber embarked on two rounds of cuts in 2020, when it cut around 6,700 jobs at the beginning of the pandemic, as demand plunged for its ride hailing service. Executives told analysts it is only hiring selectively right now, with headcount expected to be relatively largely flat this year. While it has avoided the big job cuts in the last months that other tech giants have had to make, it cut 150 jobs in its freight business in January, according to CNBC.
Analysts were impressed by the company’s cost discipline, even though that still has not yet led the company to report GAAP profits without adjustments. In the quarter, Uber reported net income of $595 million attributed to Uber Technologies, the bulk of which came from its equity method investments. Its shares rose 1.38% in early trading on Wednesday after the results.
“So we’ve been really focused on efficiency since then ,” Uber Chief Financial Officer Nelson Chai. “Last year we talked about being free cash flow positive at some point in the year, and again we achieved that metric. And now we’re talking about being GAAP operating profit at some point later in the year.”
“Uber continues to offer idiosyncratic margin expansion in a tough operating environment,” said Bernstein Research analyst Nikhil Devnani, in a note to clients. “This was another quarter of progress on adjus[ted]. EBITDA growth, with the
company highlighting that it’s also at a tipping point on GAAP operating income — an important milestone. Overall, a print that’s supportive of the bull case.”