Tag Archives: Ride-Sharing

Uber’s Stock Takes Hit After Mixed Q1 Results

The impact of Uber Inc.’s long legal battle about the classification of its drivers in the U.K. — which it ultimately lost — came to light: $600 million.

ADCU beats Uber in UK court 2021
The union representing Uber drivers in the UK secured a legal victory over the ride-hailing giant in the UK.

The California-based ride-hailing company revealed in its Q1 earnings report Wednesday that complying with the court’s decision comes with a massive price tag. The U.K.’s highest court ruling made drivers employees rather than independent contractors and entitled to benefits like any other full-time worker.

Overall, the rest of the report was a mixed bag, resulting in a drop in the stock price of about 5.6% after the results were revealed, closing at $51.18. The decline continued Thursday, sliding another nearly 9% to $46.65.

Hits and misses

The company beat analysts estimates in some areas, such as posting just a 6 cent loss compared with the 54 cents expected. However, it fell short in revenue generated where it was expected to bring in $3.29 billion during the quarter but generated just $2.9 billion.

Aurora bought Uber’s Advanced Technology Group for $400 million.

Uber’s Q1 net loss was $108 million, which looks impressive when compared with the $968 million it lost last quarter. One might suggest that the 24% jump in gross bookings compared with the previous quarter — and an all-time high — carried the company.

Nope. It was the $1.6 billion gain it received from the sale of its autonomous vehicle technology unit to autonomous vehicle tech company Aurora. Not only did the sale generate some cash, it also meant Uber wasn’t throwing cash at the business, which wasn’t making much headway in.

By the numbers

Its adjusted EBITDA loss was $359 million, which improved by $95 million from the prior quarter. Another bright spot was the company’s food delivery service, which performed better than its “core” ride-hailing division.

Delivery revenue was $1.7 billion, compared with $853 million. This part of the company carried the ride-hailing portion of Uber during the pandemic. Uber said the Eats segment revenue was up 28% quarter over quarter.

Uber is struggling to find drivers in the wake of the pandemic.

“We’re finally seeing the light at the end of the tunnel,” CEO Dara Khosrowshahi said on a call with investors. “Uber is starting to fire on all cylinders, as more consumers are riding with us again while continuing to use our expanding delivery offerings.”

Uber officials confirmed again the company expects to be profitable by the end of 2021.

Still needs drivers

Officials confirmed once again it was struggling to find drivers in the wake of the pandemic. 

Uber’s spending $250 million to increase drivers’ pay, including offering payment guarantees and other incentives to lure new drivers to the service and entice the existing ones to work more often.The effort comes as Uber and rival Lyft report their drivers are enjoying higher than average earnings due to a sharp jump in demand as states begin rolling back COVID-mandated restrictions. People are getting more and more freedom to return to “normal” and drivers are seeing a significant spike in rates due to the demand.

Lyft Sells Self-Driving Business Unit to Toyota for $500 Million

Lyft has been using the autonomous prototypes in the Las Vegas market.

Lyft Inc. sold its autonomous vehicle technology unit, Level 5, to Toyota Motor Co. for $550 million, following the lead of its rival, Uber Inc.

The company launched Level 5 in 2017 to build a self-driving system for its network of vehicles. The goal, ultimately, was to eliminate the need for drivers. The company grew to nearly 400 employees, but as Lyft continues to lose money overall, it needed to find ways to end its string of quarterly losses.

Not only will it get $550 million from Toyota, it will also stop funneling multiple millions of dollars into a development project with no finish line in sight for a payoff. Lyft gets $200 million immediately and the remaining $350 million will be paid in installments during the next five years.

Uber finalized a similar deal last fall, selling its autonomous vehicle unit called Advanced Technology Group to Aurora led by former Waymo chief Chris Urmson for $400 million.

Immediate financial relief

Lyft has provided 100,000 self-driving rides as part of its autonomous technology development.

The ride-hailing company said selling its Level 5 subsidiary puts it back on the path to profitability. First and foremost, it cuts $100 million of annualized non-GAAP operating expenses on a net basis, Co-founder and President John Zimmer noted in the announcement.

“Assuming the transaction closes within the expected timeframe and the COVID recovery continues, we are confident that we can achieve Adjusted EBITDA profitability in the third quarter of this year,” Zimmer said in a statement.

The company isn’t getting out of the robotaxi business. It’s already partnered with Motional and Waymo to develop self-driving tech and now it will just rely on that partnership to move toward autonomous vehicles. Working with the pair, Lyft’s already provided more than 100,000 self-driving rides in its vehicles in the last three years.

However, Lyft can now focus on what it can do best with autonomous vehicles by offering services such as routing, consumer interface and managing, and maintaining and cleaning partners’ autonomous vehicle fleets, which could mean added revenue, it said.

Uber made a similar choice

Lyft’s deal is similar to Uber’s move last December to sell its Advanced Technology Group, or ATG, to Aurora, the autonomous vehicle technology company founded by Google and Waymo veteran Chris Urmson. The deal came in at $400 million.

Uber CEO Dara Khosrowshahi noted after the sale of its ATG unit the company’s path to profitability had been shortened.

AVs were a critical component of the path to profitability by Uber, which now relies on part-time drivers or gig workers to ferry passengers, using its celebrated phone app. Uber invested huge sums in its internal AV project; however, was crippled in 2018 when one of its test vehicles struck and killed a pedestrian in Tempe, Arizona. It never really recovered.

Uber also ended up with a 26% ownership interest in Aurora on a fully diluted basis, the company said in a filing.

Aurora and Uber agreed to collaborate to launch self-driving vehicles on its ride-hailing and food delivery network. Uber is also working on building out its freight logistics platform but is not operating its own trucks at present.

The completion of the deal caused Uber’s CEO Dara Khosrowshahi to utter a familiar refrain to Reuters: “This essentially advances our path to profitability.” He said the deal should put the company on track for profitability by the end of this year, largely due to the fact Uber would no longer be investing vast sums of cash into ATG.


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