Uber Technologies reported its first-ever operating profit in the second quarter, underpinned by a growth in deliveries and bookings, as it works to stem long-running losses in its operations.
Net income in the three months ending June 30 reached $394 million, swinging from a $2.6 billion loss in the same period last year, the California-based company said in a statement on Tuesday.
This includes a $386 million pre-tax benefit, primarily due to net unrealised gains related to the revaluation of Uber’s equity investments, it said.
Revenue rose 14 per cent annually to $9.23 billion. Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) soared 152 per cent year-on-year to $916 million, from $364 million in the same period last year.
Uber's stock surged 2.7 per cent to trade at $49.46 a share in pre-market trading on the New York Stock Exchange on Tuesday.
Uber's mobility segment, which counts its ride-hailing services, posted revenue of nearly $4.9 billion, up 38 per cent from $3.6 billion a year ago, while its delivery unit recorded revenue of $3.1 billion, up 14 per cent from $2.7 billion a year earlier.
Its freight operations, however, posted a 30 per cent decline to $1.28 billion, from $1.83 billion in the same period in 2022.
“Robust demand, new growth initiatives and continued cost discipline resulted in an excellent quarter, with trips up 22 per cent and a GAAP [generally accepted accounting principles] operating profit, for the first time in Uber’s history,” Dara Khosrowshahi, chief executive of Uber, said.
“These results also translated into strong driver and courier engagement.”
Uber is a major player in the global ride-hailing and delivery markets, both of which have become essential in daily lives as consumers bank on the convenience they bring through their mobile devices.
Revenue in the ride-hailing and taxi market is expected to hit nearly $360 billion by 2027, from and estimated $312.6 billion in 2023, growing at a compound annual rate of 3.55 per cent, data from Statista shows.
The number of users is projected to reach about 1.45 billion users by 2027, it said.
Income from operations swung to a gain of $326 million in the second quarter, from a loss of $713 million a year ago, the company said. Uber had amassed operating losses of about $31.5 billion since it first reported its financials in 2014.
Nearly six million drivers and couriers earned a record $15.1 billion during the three-month period, Uber said.
Uber's net cash from operating activities stood at $1.2 billion, while free cash flow was at $1.1 billion.
Robust demand, new growth initiatives and continued cost discipline resulted in an excellent quarter, with trips up 22% and a GAAP operating profit, for the first time in Uber’s history
Dara Khosrowshahi,
chief executive of Uber
These reflected “the unique power of the Uber platform and the team’s relentless focus on profitable growth” in the second quarter, chief financial officer Nelson Chai said.
Unrestricted cash, cash equivalents and short-term investments were at $5.5 billion at the end of the second quarter, Uber said.
Looking ahead, Uber expects gross bookings of between $34 billion and $35 billion, and adjusted ebitda of between $975 million to $1.025 billion in the third quarter of 2023.
In May, Uber announced a new type of account for teenagers that will allow them to take rides without a parent or guardian. The new accounts are built for “parents and caretakers of 13-17-year-olds to save precious time with peace of mind”, Mr Khosrowshahi said.
Uber previously required users to be at least 18 to sign up for an account, but now teenagers aged 13 to 17 can have their own accounts and request rides, as long as their profile is linked to a parent or guardian's account.
Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
How to wear a kandura
Dos
- Wear the right fabric for the right season and occasion
- Always ask for the dress code if you don’t know
- Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work
- Wear 100 per cent cotton under the kandura as most fabrics are polyester
Don’ts
- Wear hamdania for work, always wear a ghutra and agal
- Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
UAE v IRELAND
All matches start at 10am, and will be played in Abu Dhabi
1st ODI, Friday, January 8
2nd ODI, Sunday, January 10
3rd ODI, Tuesday, January 12
4th ODI, Thursday, January 14
