Since a company called UberCab took to the streets of San Francisco almost a decade ago, Uber has been many things: an app-powered black car service for self-described “ballers”; a slayer of taxi companies; a scandal-ridden stand-in for Silicon Valley ills; a vehicle to transfer VC-funded joyrides to the masses. When it announced its second quarter earnings on Thursday, it became clear that the ride-hail company isn’t quite a ride-hail company anymore. Uber’s a delivery service now—and one that’s still losing plenty of dough.
Amid a pandemic that’s kept workplaces, restaurants, and bars closed and potential riders housebound, the company’s classic rides business cratered, with total bookings dropping by 75 percent year-over-year. But eaters the world over turned to food—and food delivery—while stuck inside. For the first time, the company’s delivery segment generated more in bookings than its rides segment. More than double, in fact. Eats’ bookings grew 112 percent year-over-year.
Khosrowshahi noted on a call with investors Thursday that delivery is now the size of Uber’s rides business when he joined the company in 2017. “We’ve essentially built a second Uber in under three years,” he said.
In all, the company posted a $1.8 billion loss between the beginning of April and the end of June. Uber stock fell 2.5 percent in after-hours trading Thursday evening, leaving its shares 25 percent below their May 2019 IPO price.
The company still has not made money off the food delivery sector, where DoorDash, JustEat, Deliveroo, and Zomato are jostling for global supremacy. Uber’s delivery section ultimately lost $232 million last quarter. The company backed off a potential acquisition of the US company Grubhub in the spring, but last month agreed to acquire Postmates, which gives it better reach in Los Angeles and US Southwest. Khosrowshahi said the company’s delivery business was buoyed by larger orders from small and medium-sized restaurants, which tend to pay bigger commissions than national brands like McDonald’s and Starbucks. He said he was optimistic about the industry’s long-term plans: “Pure-play delivery companies can and will be profitable,” he said, even though none are yet.
Uber has bigger plans for the delivery space. Last year, it acquired a majority stake in Cornershop, an Instacart rival that delivers groceries, mostly in Latin America. Now, some Central and South American and Canadian customers can order on-demand groceries through the Uber app. During the pandemic, Uber launched an experiment called Uber Connect, which lets customers in 170 cities send small packages to others via car. The company says Connect has completed 3 million trips since mid-April.
