Uber Shares Slump on Muted Bookings in US Rides Business
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Uber Technologies Inc. reported weaker-than-expected ride bookings and issued a middling forecast for the holiday quarter, even as it delivered record operating profit. Shares declined in early trading.
The company posted $1.06 billion in operating income for the three months ended Sept. 30, Uber said in a statement Oct. 31, far exceeding estimates for a metric that only turned positive last year.
Despite setting a record, the firm struggled with currency exchange headwinds, which weighed on its rideshare business. Gross bookings, which includes ride hails, delivery orders and driver and merchant earnings but not tips, totaled $41 billion for the third quarter, slightly below the midpoint of Uber’s own guidance range. Wall Street was expecting $41.2 billion, according to Bloomberg-compiled estimates.
For the current quarter, it forecast bookings of $42.75 billion to $44.25 billion, with the midpoint just missing analysts’ estimates of $43.7 billion. The midpoint of the company’s outlook range for fourth-quarter adjusted EBITDA also fell slightly short of expectations.
Khosrowshahi
The rideshare giant has been investing in new areas across both its ride-hailing and delivery businesses in the U.S. and internationally, where it said it has seen stronger growth. Over the past year, the firm has added more transportation options to its platform including taxis, carpools and shuttles to airports and other venues. But the company’s latest results are likely to stoke some concern from investors that its core U.S. rideshare business is not keeping pace during the holiday period.
Shares of Uber fell 9.5% in early trading after the results were announced and as a conference call with investors kicked off. Shares of its smaller rideshare rival, Lyft Inc., also fell 2.6% following the report.
Uber said growth in the ride-hailing business was fueled by its performance in the U.K., Argentina and Germany thanks to a combination of driver supply, taxis, two-wheelers and scheduled rides.
On the conference call, CEO Dara Khosrowshahi said the U.S., which makes up a little less than 50% of its gross bookings and more than half of its profitability, has seen some slowdown in rides because of higher insurance costs being passed onto consumers. The slowdown was observed in New Jersey and California, he said, where insurance costs are particularly high.
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Still, he remains optimistic about the U.S. market as he expects those costs to grow at a slower rate. The company is partly mitigating those costs by encouraging drivers to drive more safely, he added. He also said consumers are becoming more selective on whether to go out on the weekends, while weekday growth has been stronger thanks to business rides.
Delivery-segment gross bookings beat expectations in the third quarter, but the unit’s 16% year-over-year growth trailed that of leading U.S. delivery app DoorDash Inc., which reported better-than-expected results on Oct. 30.
Uber has been expanding service into suburban areas globally and reaching new customer demographics through teen accounts. And it has struck deals with new merchants — such as H Mart, Michaels and JD Sports — allowing customers to arrange deliveries for things beyond just restaurant orders, which helps boost order frequency.
In prepared remarks, Khosrowshahi said there are still “huge opportunities to increase consumer penetration,” including expanding into less dense markets and signs that fast, on-demand services are becoming an entrenched habit for more people. Chief Financial Officer Prashanth Mahendra-Rajah said the company’s performance thus far “should give investors confidence in our ability to deliver on our 2026 commitments.”
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It’s also made progress this year in adding subscribers to its Uber One program by offering discounts to college students in the U.S. and Canada. The number of members grew about 70% from a year ago to more than 25 million, the company said, adding that these customers spend more than three times as much as non-members each month.
The expansion of Uber’s user base and merchant selection has in turn helped boost its nascent advertising business, which grew nearly 80% year-over-year and helped contribute to the adjusted earnings beat in the period.
