Uber Records First Operating Profit in History
Uber, the American ride-hailing company, has achieved a significant milestone by recording its first-ever operating profit. The company reported pre-tax earnings of $326 million from its operations, thanks to a 22% increase in trips booked on its platform in the year ending June. This marks a turnaround from the previous year when Uber reported an operating loss of $713 million.
Since revealing its financial details in 2014, Uber has accumulated billions of dollars in losses due to its aggressive global expansion strategy. While the company has previously reported profits after tax, these were primarily due to revaluations of equity investments or gains from asset disposals, rather than from its core operations.
Despite turnover rising by 14% to $9.2 billion, slightly below Wall Street predictions, Uber managed to keep its costs in check, with only a 1% increase. This slow rate of cost growth was highlighted by Uber’s CEO, Dara Khosrowshahi, as a contributing factor to the company’s first quarterly rise in operating profit.
Khosrowshahi stated, “Robust demand, new growth initiatives, and continued cost discipline resulted in an excellent quarter, with trips up 22% and a GAAP operating profit, for the first time in Uber’s history.” He also mentioned that the positive financial results translated into record earnings for drivers and couriers, with a total of $15.1 billion earned during the quarter by six million individuals.
Following the announcement, Uber’s shares rose by 1% in pre-market trading, as executives revised their forecasts for the current quarter. The company now expects earnings before interest, taxes, depreciation, and amortization to range between $975 million and $1.025 billion, surpassing the estimate of $915 million predicted by Wall Street investors.
Uber has faced scrutiny in the past, including an international investigation by The Guardian in 2022. The investigation revealed leaked files that exposed the company’s attempts to influence politicians and restrict access to their databases during police raids. Uber responded to the allegations by stating that it does not condone such behavior and that it is committed to upholding its present values.
In 2021, Uber drivers won legal battles after the Supreme Court ruled that they should be classified as workers, entitled to minimum wage and paid holidays. This landmark decision resulted in payouts for drivers and further highlighted the ongoing challenges faced by gig economy companies in relation to worker classification.
Overall, Uber’s achievement of its first operating profit demonstrates the company’s ability to adapt and improve its financial performance. With a focus on cost control and continued growth initiatives, Uber aims to maintain its positive trajectory in the coming quarters.