Technology

Uber, Lyft still sapped by COVID pandemic, plus 4 other takeaways this quarter

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Uber and Lyft see income drops and large internet loss. 


Angela Lang/PJDM

Uber and Lyft have seen their rides businesses plummet over the past a number of months, largely due to the coronavirus pandemic. And based mostly on the businesses’ third-quarter earnings, it does not seem like that is altering. However with Uber and Lyft sustaining an optimistic tone and promising profitability within the not-so-distant future, inventory costs have proven solely modest drops, starting from decreases of two% to five%.

“It is laborious to imagine that it has been eight months since I first spoke with you in regards to the coronavirus pandemic,” Uber CEO Dara Khosrowshahi mentioned in the course of the firm’s earnings name final week. “With out query, its impression on the world has been one of the vital occasions of our lifetimes. And we moved rapidly as an organization to reply.”

Lyft’s executives expressed an identical sentiment of their firm’s earnings name Tuesday and mentioned they’re seeing Lyft’s rides enterprise choose up in lots of cities throughout the US, together with development in its scooter and bike rental companies.

Each Uber and Lyft additionally touted their big political win in California. Together with a number of different gig economic system corporations, they sponsored a state poll measure, Proposition 22, to make sure they might classify drivers as impartial contractors, relatively than workers. After those pushing the measure spent $205 million on the marketing campaign, the proposition handed with 58% of the vote.

“We imagine the result in California is a win, win, win,” Lyft CEO Logan Inexperienced mentioned in the course of the firm’s earnings name. “Past California, we’re persevering with to have interaction with coverage makers throughout the nation.”

Listed below are 5 takeaways from the 2 ride-hailing corporations’ third-quarter earnings:

Falling income and plenty of loss

Each Uber and Lyft noticed large drops in income over the identical interval final 12 months. Uber’s income fell by 18% for the reason that similar time final 12 months, and Lyft’s decreased by 48%. Each corporations additionally noticed large internet loss, with Uber reporting a $1.1 billion loss from July to September and Lyft saying a $459.5 million loss in the identical time interval.

Proposition 22 win

Regardless of large losses, each corporations spent huge over the previous couple of months in California. In whole, Uber contributed about $59 million to the Proposition 22 battle and Lyft threw in about $49 million. It began when the state passed the law AB5 last fall, which required the businesses to reclassify drivers as workers and supply these staff with labor protections. Each corporations mentioned such a reclassification and added prices might decimate their companies. So, Uber and Lyft took the problem to voters. Their Proposition 22 marketing campaign, which blanketed the state in ads, textual content messages and mailers, was the most costly poll measure marketing campaign in California historical past.

“It is a distinct, clear and decisive win that is a turning level within the dialog,” John Zimmer, Lyft’s president, mentioned within the third quarter earnings name. “I imagine strongly that different states, in addition to coverage makers, will see this as a watershed second.”

Not a whole lot of riders

Together with falling income, each Uber and Lyft have seen a major lower in riders on their platforms over the previous few months. The businesses attribute that to the coronavirus pandemic with individuals nonetheless sheltering-in-place and never touring round like they used to. Uber’s lively month-to-month riders fell by 24% from the identical time final 12 months and Lyft’s dropped by 44%. Whereas these numbers seem vital, each corporations reported an uptick of passengers utilizing their service over the earlier quarter. Lyft, for instance, reported a 44% enhance of lively riders from the second quarter to 3rd quarter.

“The Gig Economic system has been within the eye of the darkish COVID-19 storm with ridesharing stalwarts Uber and Lyft seeing client demand coming to a screeching halt as the worldwide lockdown went into impact in early March,” Daniel Ives, Wedbush analyst, mentioned in an announcement. “Nonetheless, since then we now have seen ridesharing choose up modestly and barely faster than Road expectations.”

Meals supply on the rise

As individuals have hunkered down and used ride-hailing providers much less this 12 months, some individuals started ordering more meals and groceries from Uber’s meals supply enterprise Uber Eats. The corporate reported Uber Eats gross bookings grew by 135% over the identical time final 12 months. Throughout its earnings name, Uber mentioned clients nonetheless continued to make use of Uber Eats even in locations the place coronavirus restrictions had eased.

Lyft does not have a definite meals supply service on its platform, nevertheless it has branched out from its core transportation enterprise in the course of the pandemic. In October, it partnered with food delivery service Grubhub to convey restaurant meal deliveries to individuals who belong to Lyft’s membership program Lyft Pink. The corporate’s vice chairman of selling, Heather Freeland, mentioned on the time, “We heard from our riders that meals supply was a profit they needed, so we went to work to make it occur.” 

Nonetheless not worthwhile

Regardless of an emphasis meals supply, neither Uber nor Lyft are worthwhile. Even Uber Eats as a stand-alone enterprise is not but worthwhile. And neither firm has ever been worthwhile. Throughout their third quarter earnings calls, nevertheless, each Uber and Lyft advised buyers that they have been on observe to succeed in their goal aim of profitability (on an adjusted foundation) earlier than the top of 2021.

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Author

Dara Kerr