Uber Misses Profit Target, Costs Surge, Shares Drop By 6%

Uber Technologies reported a lower-than-expected profit for the October-December period due to rising costs and forecasted first-quarter bookings below estimates.

The announcement sent the company’s shares down six per cent in pre-market trading.
Despite the profit miss, Uber exceeded fourth-quarter revenue expectations, benefiting from stable ride-hailing demand for office commutes and a strong holiday season for its delivery business.

The San Francisco-based company has been working to attract more businesses and teenage users while expanding to less saturated markets.

Uber’s business-focused service saw a 50 per cent surge in bookings in the last quarter of 2024, aided by return-to-office mandates. Its “Uber for Teens” segment also posted a similar jump and is now available in about 50 countries.

Adjusted profit for Q4 2024 came in at 23 cents per share, falling short of analyst expectations of 50 cents, according to LSEG data. However, total revenue climbed to $11.96bn, surpassing the average analyst estimate of $11.77bn.

Ride-hailing revenue rose 25 per cent, and delivery revenue increased 21 per cent, both exceeding expectations. Gross bookings totaled $44.2bn, above the forecasted $43.45bn.

Meanwhile, costs and expenses surged 20.5 per cent to $11.19bn, contributing to an operating income of $770m, which fell short of the projected $1.22bn.

The Chief Executive Officer, Dara Khosrowshahi outlined Uber’s 2025 growth strategy, emphasizing lower price hikes and a focus on maintaining affordable rates for consumers by limiting increases in insurance costs.

“To maximize demand, we remain committed to keeping prices as low as possible, passing through only the insurance cost increases to consumers,” Khosrowshahi said, adding that UberX fares in the U.S. are expected to rise only slightly in 2025.

Competition remains fierce, with rival Lyft aggressively introducing competitive pricing and features such as Price Lock, which guarantees daily commuters consistent fares.

Uber projected first-quarter gross bookings between $42bn and $43.5bn, factoring in an estimated 5.5 percentage point impact from the strong U.S. dollar.

Analysts had expected bookings of approximately $43.42bn. The company’s forecasted adjusted core profit for Q1 2025, ranging between $1.79bn and $1.89bn, came in slightly below analysts’ estimates of $1.85bn.

In a bid to solidify its position in the autonomous vehicle sector, Uber announced that Alphabet’s Waymo will launch its self-driving taxi service in Austin, Texas, exclusively on the Uber platform next month.

Meanwhile, Tesla CEO Elon Musk stated that the automaker would begin testing its driverless car technology in Austin in June, though details on the rollout of a paid service remain unclear.

Uber Misses Profit Target, Costs Surge, Shares Drop By 6% is first published on The Whistler Newspaper