Uber’s journey to profitability reaches its destination. Business

Uber’s shareholders often feel the same way as users of its service when they see drivers wandering off course and losing their way. After 15 years and tens of billions of losses, the journey to profitability has come to an end. The company, founded in 2009 by Travis Kalanick and Garrett Camp, is not only a global giant but also a money-making machine. Moreover, Uber has a full tank of fuel to run at full speed for the next few years.

“Initially, we were expanding rapidly across the world while investing extensively to build our position in this category. Given those huge losses, many wondered whether Uber would ever make money. With extraordinary growth and profitability, Uber is now stronger than ever,” CEO Dara Khosrowshahi told a conference call with investors this week.

Uber incurred losses of $31,675 million (about 29,500 million euros at the current exchange rate) between 2014 and 2022. The red numbers were flat, except for a mirage of annual profit of $997 million in 2018 due to extraordinary capital gains. The benefits for 2023 are real. The company achieved favorable operating results for the first time and after revenue increased by 17% to $37,281 million, allowing it to end the year with a net result of $1,887 million. The money being moved by Uber is huge: Gross reservations increased 19% to $137,865 million. “2023 was a turning point for Uber, demonstrating that we can continue to deliver strong and profitable growth at scale,” Khosrowshahi said when presenting the results.

“After a difficult period during the pandemic and years of aggressive spending to gain market share, Uber has finally found its footing and is demonstrating maturity in its finances,” says eToro analyst Josh Gilbert. “The company’s long-term turnaround after the pandemic is finally bearing fruit,” says Thomas Monteiro, senior analyst at Investing.com. “Mobility and delivery are growing strongly again, market share is growing and EBITDA continues to grow,” Nikhil Devnani, an analyst at Burstein, summarized in a report to clients.

It’s been a long road. The initial service, launched two years after the iPhone hit the market, was initially called UberCab and was aimed at customers with higher purchasing power. Its growth and popularity were unstoppable despite persistent regulatory hurdles and conflicts with the traditional taxi sector, which slowed down its implementation in many markets and which led to capitulation to the giant. Now, Uber has 235,000 taxi drivers on its platform in 33 countries around the world.

“I’ve been at Uber for almost 10 years and it’s true that the relationship with taxis hasn’t always been friendly, but that relationship is changing,” said Jill Hazelbaker, the group’s head of communications, public policy and marketing. Wednesday. “We have welcomed iconic taxis from Hong Kong, Tokyo and New York to the platform. And we’re finding that taxi drivers who accept rides with Uber are more engaged and earn more than those who don’t,” he said, before releasing a statement: “The world We have big ambitions to bring all taxis in London to the Uber platform.” For example. “I’m very excited to welcome London’s iconic black cabs in late 2024.”

Uber has lost its way many times in its 15-year history. Kalanick circumvented taxi and car rental regulations to put pressure on prices. Additionally, Uber spied on competitors and used secret software to deceive regulators. Ultimately, a series of scandals over gendered behavior, workplace and sexual harassment, poor working conditions for drivers, legal battles, and other problems led to his resignation in 2017.

After a summer with no one to drive, the company hired Khosrowshahi, the head of Expedia. The new driver headed to the stock market, where Uber debuted with a 7.6% decline in the first session in May 2019. Doubt remained for months. Just when they were starting to get market support, the pandemic hit. Shares fell by half to $45 in March 2020.

The pandemic changed everything. Mobility declined, but the company took refuge in the delivery service, Uber Eats, which took off with great force. Additionally, it conducted layoffs and cut other costs. It also set aside ambitious (and disastrous) plans to develop its own autonomous taxis. Paradoxically, that crisis helped Uber shape up, diversify its business, and fully commit to a multi-service platform model.

“The strategy is simple: create best-in-class products and enhance them with the power of the platform,” Khosrowshahi explained this week. “As we have grown, that power has become even more apparent. Now, our platform gives us a simple, but important advantage. “We can attract customers at lower costs and, at the same time, generate higher lifetime value than our competitors,” he said.

The idea is that a customer who takes an Uber taxi one day orders food the next day. And when you order food at a restaurant, Uber can even offer to bring you a drink or dessert purchased from the supermarket, or medicine from the pharmacy… With Uber Direct it delivers all types of purchases and Uber Even with Connect it is a parcel company between individuals. Added to this are tailored advertising offerings, which is another fast-growing business. “The more products and services we add to the platform, the more data we will have and the more opportunities presented to us,” Khosrowshahi explains.

Uber, which has announced a $7 billion share buyback plan, is worth more than $150 billion and is trading at record highs. Over the next three years, it expects an average annual growth of 15% to 20% in gross billings and 30% to 40% growth in EBITDA. “The question whether Uber will one day make money has already been answered,” says Khosrowshahi.

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