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Uber’s first-quarter results fell far short of expectations, weighed down by costs from the ride-hailing service provider’s decades-long battle with global regulators.
The San Francisco-based company reported operating profit of $172 million for the first three months of the year, compared with analysts’ forecasts of more than $600 million.
Uber on Wednesday attributed the deficit to “individual statutory and regulatory reserve changes and settlements,” although the company said it was in the process of “resolving several legacy issues.”
The legal costs also included Uber agreeing to pay $178 million to settle a class action lawsuit brought by taxi drivers in Australia. However, the quarter was still positive compared to the $262 million operating loss reported for the first three months of 2023.
The share price fell nearly 9 percent in premarket trading on Wednesday.
Uber and its competitors are grappling with increasing global regulatory headwinds, particularly when it comes to paying drivers and delivery workers.
As part of a lawsuit filed in Britain this month, Uber faces a multimillion-pound lawsuit from more than 10,000 black taxi drivers in London.
The company previously reported that 2023 was its first full year of operating profitability, which Uber called a “turning point” in its turbulent history.
The milestone followed years of losses during which the company spent billions of dollars battling ride-hailing rivals.
After investors demanded evidence that the sector could be sustainably profitable, Uber worked to increase margins and reduce costs.
Sales rose 15 percent to $10.1 billion in the last quarter, in line with analyst forecasts. However, Uber reported a net loss of $654 million in the three months ended March 31, significantly missing analyst forecasts for a net profit of about $500 million.
The company said the loss was due to an accumulated writedown of $721 million on the value of Uber’s shares in other groups, which include self-driving car company Aurora and Chinese ride-hailing company DiDi.
Adjusted earnings before interest, taxes, depreciation and amortization rose 82 percent from the same period last year to a record $1.4 billion, beating analyst forecasts of $1.3 billion.
“Our results this quarter further demonstrate our ability to deliver consistent, profitable growth at scale,” said Chief Executive Officer Dara Khosrowshahi.
Adjusted Ebitda would be between $1.45 billion and $1.53 billion in the current quarter, in line with analyst forecasts.
The total value of Uber’s ride-hailing, delivery and freight bookings was also just below analysts’ expectations at $37.7 billion. The company attributed this in part to weaker demand in the Latin American region compared to the same period last year.
However, Uber said demand in its delivery and mobility businesses continued to be “robust.” In March, India became the third country in the world to have more than a million Uber drivers, after the US and Brazil.
Uber said further growth would come in part from a broader range of services, such as the food delivery segment, which the company wants to expand.
This week, Uber announced a partnership with Instacart that will allow the food delivery company’s U.S. users to order from restaurants listed on Uber Eats. The ride-hailing company hopes the move will help it compete with rival DoorDash in suburban locations across America.
Analysts at JPMorgan noted that while Uber doesn’t offer Instacart’s grocery capabilities, “we believe this first step opens the door for companies to potentially work more closely together down the road.”
On Wednesday, Khosrowshahi said: “Make no mistake: we remain committed to executing on our food and retail strategy.” . Expect more food news in the coming weeks.”
Uber also said it was confident it could “pool” demand for self-driving vehicles, which are already available in some regions.
In the first quarter, the company began share repurchases as part of its first $7 billion share repurchase program, which Chief Financial Officer Prashanth Mahendra-Rajah said would “partially offset” the company’s stock-based compensation obligations for employees.