Uber shareholders often had the same feeling as users of their service when they saw the driver veer off route and seemingly take a detour. After 15 years and losses in the double-digit billion range, the journey to profitability is over. Founded in 2009 by Travis Kalanick and Garrett Camp, the company is not only a global giant but also a money-maker. In addition, Uber has a full tank to continue at full speed in the next few years.
“Initially, we expanded rapidly globally while making massive investments to expand our position in the category. Given these huge losses, many wondered whether Uber could ever make money. “Now Uber is stronger than ever, with exceptional growth and profitability,” CEO Dara Khosrowshahi said at a conference with investors this week.
Uber accumulated losses of $31,675 million (about €29,500 million at current exchange rates) between 2014 and 2022. The red numbers have been the constant, apart from the mirage of an annual profit of 997 million in 2018 due to exceptional capital gains. The benefits of 2023 are real. The company achieved a positive operating result for the first time and ended the year with a net income of $1,887 million, following a 17% increase in sales to $37,281 million. The money Uber moves is much higher: gross reservations rose 19% to $137,865 million. “2023 was a turning point for Uber and demonstrated our ability to continue to generate strong and profitable growth at scale,” Khosrowshahi said in 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 showing maturity in its financials,” said Josh Gilbert, analyst at eToro. “The company’s long-term post-pandemic turnaround is finally starting to bear fruit,” said Thomas Monteiro, senior analyst at Investing.com. “Mobility and delivery are growing strongly again, market share is increasing and EBITDA continues to increase,” summarizes Nikhil Devnaniy, analyst at Berstein, in a report for clients.
It was a long way. The first service, launched two years after the iPhone was launched, was initially called UberCab and was aimed at customers with high purchasing power. Its growth and popularization were unstoppable despite the constant regulatory obstacles and confrontations with the traditional taxi sector, which slowed its introduction in numerous markets and ultimately capitulated to the giant. Uber now has 235,000 taxi drivers on its platform in 33 countries around the world.
“I have been at Uber for almost 10 years and it is true that the relationship with taxis has not always been friendly, but that relationship is changing,” said Jill Hazelbaker, head of communications, public policy and marketing at Uber, this Wednesday. Clusters. “We welcomed famous taxis from Hong Kong, Tokyo and New York to the platform. And we find that taxi drivers who accept Uber rides are busier and earn more than those who don't,” he added, before making a charge: “We have big ambitions to have all the world's taxis on the “That’s why I’m so excited to welcome London’s iconic black taxi at the end of 2024.”
Uber has veered off course many times in its 15-year history. Kalanick circumvented taxi and car rental regulations to gain access by cutting prices. In doing so, Uber spied on competitors and used secret software to deceive regulators. In the end, a series of scandals involving sexist practices, workplace harassment and sexual harassment, poor working conditions for drivers, litigation and other issues led to his resignation in 2017.
After a summer with no one behind the wheel, the company hired Khosrowshahi, the head of Xpedia. The new driver went public, where Uber debuted in May 2019 with a decline of 7.6% in the first session. The doubts remained for months. Just as he was starting to gain traction in the market, the pandemic hit. Shares fell to half the $45 price at which they were placed in March 2020.
The pandemic has changed everything. Mobility collapsed, but the company took refuge in the delivery service Uber Eats, which took off with enormous force. At the same time, layoffs were made and other costs were reduced. Ambitious (and ruinous) plans to develop autonomous taxis have also been abandoned. Paradoxically, this crisis helped Uber get back into shape, diversify its business and fully commit to the multi-service platform model.
“The strategy is simple: build best-in-class products and fortify them with the power of the platform,” Khosrowshahi explained this week. “As we have grown, this power has become even more evident. Now our platform offers us a simple but significant advantage. We can acquire customers at a lower cost while generating higher lifetime value than our competitors,” he added.
The idea is that the customer who takes an Uber taxi one day orders food another day. And if you order food in a restaurant, Uber can also offer you to bring a drink or a dessert from the supermarket or medicine from the pharmacy… With Uber Direct it distributes purchases of all kinds and with Uber Connect it is also a parcel company between private individuals. Added to this are customized advertising offers, another booming business. “The more products and services we add to the platform, the more data we will have at our disposal and the more opportunities we will have,” explains Khosrowshahi.
Uber, which announced a $7 billion share buyback plan, is worth more than $150 billion and is trading at record levels. Annual gross sales growth of 15 to 20 percent and EBITDA of an average of 30 to 40 percent are expected for the next three years. “The question of whether Uber could one day make money now has an answer,” says Khosrowshahi.
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