Uber reported profits after the closing, the company’s losses decreased, but revenue fell short. Ygal Arounian told Yahoo! Finance The company is also betting high on its Uber Eats business.
Video transcription
SEANA SMITH: Ygal, what– I think, what stands out for you in this report? We are seeing better than expected numbers for your Eats business, the tour business still under a little pressure. The stock here fell about 2%.
YGAL AROUNIAN: Yes, I think what stands out the most is, I think, following what we saw from Lyft last night, it’s the best EBITDA and Uber hasn’t changed anything around its language on the way to profitability like Lyft did yesterday, but continuing to advance in this line of obtaining profitability by the end of the year as a whole and achieving it in a – with less demand than originally projected. The Eats business is on fire, and this is very important. This led them to the pandemic. This was also a very important piece for them.
ADAM SHAPIRO: So, what profit analysts will call – what is the metric that will be the main metric? Will it be all about the delivery business, or will it be about gross reserves in the traditional core business?
YGAL AROUNIAN: You know, I think it will be both. So, you know, people are not really surprised that the tours have been challenged. That’s why you saw Lyft’s shares perform so well today, even though your revenue guide failed. Your revenue numbers have failed.
The pandemic has worsened and the demand for mobility has decreased. Therefore, analysts will try to understand the trends that will emerge in the coming months, what they are seeing in specific cities, perhaps cities where the pandemic has not had as much impact, or has improved.
Furthermore, the most important thing is that people will want to understand what will happen as we expect strong growth on the Eats side and in the delivery business. Uber is doing a lot over there. It is turning out to be much more than just a food delivery at a restaurant. They are going to the grocery store. They just purchased Drizly, which is an alcohol delivery service. So they’re really turning it into a last mile delivery platform, way beyond restaurants. This is a great opportunity for them in the long run.
But as people leave and leave the house and the weather heats up and people want to go out to eat a little more in the second half of the year, or even from 2Q on, as these numbers will seem to be of interest as well. And then, of course, profitability, which is everyone’s priority.
SEANA SMITH: Ygal, I want to ask a little more about this profitability. In the statement, they say they remain on the right track – “right on the way,” were the exact words – to achieve the 2,021 profit targets. Was that a surprise to you or was it something you expected to hear from Uber today?
YGAL AROUNIAN: Oh, it’s really no surprise. That is – the pandemic was obviously a challenge for Uber in the travel sharing business and, really, overall, although it supported Uber Eats so much. But what we saw from Uber and Lyft throughout the pandemic is that they caught on – both took the opportunity to scale the ship. They took many costs out of the deal.
And even if they have been challenged in at least a few pockets, they will come out of it much better positioned with a lower cost profile, taking away many of those expenses, unnecessary expenses and the fat of the business. And it will really allow them to leverage growth for profitability in a much stronger way than they would be without the pandemic reaching and the right size.
ADAM SHAPIRO: I’m trying to find that number for Uber. I know the Lyft number. They talked about eliminating $ 360 million in fixed costs in their report. Let me switch to that. Given the fact that delivery is so important to them right now, is there room for another acquisition to expand that side of it?
YGAL AROUNIAN: It’s possible. I mean, we saw some things. And I think they are much better positioned here than we were a year or a year and a half ago, where the delivery business was so cruel. They acquired Postmates. There was some rationalization on the delivery side of the restaurant. They acquired Cornershop, which was a Latin American company, and are building it in the USA also to deliver groceries. And now they have alcohol delivery.
There are probably other pockets where they can continue to attack. But now they have really important parts for many last-mile delivery options. They also launched some things internally, such as delivery of essential products to pharmacies and partnerships with CVS and Walgreens. They did a lot to move the restaurant’s food to the last mile as a whole.