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Ride-hailing giant Uber expected on Tuesday that strong demand during the holiday season would lead to a higher profit for the company than analysts expected after its business growth slowed between July and September due to accounting adjustments.
Changing the system for calculating some of the company’s revenues affected the growth of its main business related to passenger and food delivery by eight percentage points, so third-quarter revenues fell short of expectations.
Uber faces intense competition from Lyft, which reduced the prices of its services to win customers after continued inflation raised fears of a decline in demand for shared transportation.
But Uber CEO Dara Khosrowshahi spoke in an optimistic tone, saying, “Consumers’ demand for our platform remains good as we enter the most demanding period of the year.”
He added, “This trend continued in the fourth quarter, which witnessed the highest level ever achieved in October in terms of total trips and total reservations, driven by strong demand for transportation and delivery services.”
According to data from the London Stock Exchange Financial Information Group, Uber expects fourth-quarter adjusted core earnings, a key measure of profitability, to range between $1.18 billion and $1.24 billion, higher than estimates of $1.15 billion.
Gross bookings, or the total dollar value earned from its services, are also expected to range between $36.5 billion to $37.5 billion, versus expectations of $36.31 billion.
“With driver supply also remaining strong in the (third) quarter at a record level of 6.5 million active drivers, the company appears well positioned to deliver strong results,” analysts at William Blair said.
But optimism about travel demand during the holiday season, a crucial period for sectors including airlines and hotels, will also benefit Uber’s competitor Lyft, which will announce its earnings on Wednesday.
2023-11-08 04:20:45
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