As Uber Technologies Inc.’s core rides business continues to suffer during the pandemic, company executives made some intriguing statements on Wednesday, including the possibility of licensing its technology to its taxi and transit rivals.
Earlier Wednesday, Uber reported another quarterly loss, with a 51% year-over-year drop in revenue in its rides business, which Uber calls its mobility business. Revenue in mobility fell to $1.47 billion, down from $3.05 billion a year ago. Delivery, however — made up of Uber Eats and now Postmates — surged with people stuck at home ordering take-out, nearly reaching the levels of mobility. Delivery soared 220% to $1.35 billion.
Uber UBER, +5.99% executives sounded cautiously optimistic about the slow reopening of some cities around the world, observing a 90% recovery in its Brazil business and a 60% gain in Taiwan.
“The recovery in these markets demonstrates consumers’ pent-up desire to start moving again,” said Uber Chief Executive Dara Khosrowshahi. Then he dropped the most interesting part of the earnings call: “While Uber is continuing to gain share versus other modes of transportation, over the next six months we’ll begin to prepare our business to go from preservation mode to recondition.”
In terms of “reconditioning,” Khosrowshahi said that the company is now looking to offer new mobility products, and potentially partner with taxi companies and public transportation systems by offering its software and data analytics. It is not clear if Uber wants to include taxis and public transportation as part of its “super app” concept, as it seeks to offer rides and multiple delivery services all in one app, but that might be a logical fit.
“I’m even more optimistic about the investments that we’re making, and other modes of transport and helping the transit agencies of the world recover and rebound, of powering taxis with our routing technology, our e-hail technology, our pricing technology, etc….I think it adds up to essentially a platform for any kind of transport in your city, and a unique platform in terms of a scale and global scope,” he said.
Whether taxi and public transit agencies will want to partner with the company that has fueled many of their losses for the past few years is a bigger question, but those rivals may also be swayed by the power of Uber’s logistics software.
“Dara is taking a very broad strategic approach to the market and is viewing taxis as potential technology partnerships, as well as public transportation,” said Dan Ives, a Wedbush Securities analyst, in an email. “Post-pandemic Uber will be a different company and extend olive branches to different modes of transportations for additional revenue opportunities.”
The Uber CEO also said that he believes that in 2022 or 2023 its mobility business will be growing again at “substantial double-digit rates,” and the company will have break-even earnings at some point in 2021.
Ives said Uber’s targets are achievable. With the coronavirus vaccine now here, and with mass distribution likely by summer, “we expect consumer demand for Uber to show a significant snap back during the course of 2021, with the company potentially getting back to pre-COVID ridership by early 2022,” Ives said in a note.
Even so, investors have a lot to parse through many optimistic predictions — some perhaps overly optimistic — as they try to determine how feasible any of them actually are. In after-hours trading, Uber shares fell nearly 5%.
Uber’s potential recovery in the biggest part of its business is clearly dependent on the world returning to some normalcy, which is really impossible to accurately predict right now.