Uber’s Q4 2020 report filed on Wednesday showed the company made $3.2 billion in revenue, down 16% year-on-year to put its loss at $6.8 billion. However, the loss is good news. The ridesharing company recorded $0.54 per a share loss, beating Wall Street’s expectations of $0.55, after a troubling 2020 that plummeted its revenue.
The California-based company was severely hit by COVID-19 pandemic which crippled economic activities with movement-restricting safety measures. Compared to the $8.5 billion loss in 2019, it saw a significant revenue growth amidst the strains.
Uber’s Q3 report showed it lost $968 million, including $236 million in stock-based compensation expenses. But the figures indicate slight revenue growth compared to the nearly $1.1 billion loss in the same period last year.
Uber focused on food delivery to minimize the impact of the pandemic on its business. UberEats thrived, beating the ride-hailing division in revenue generation for the third straight quarter as online food orders increased during the lockdowns. The food delivery revenue increased 224% to $1.4 billion in the fourth quarter compared to the same period in 2019, while ride revenue was $1.5 billion, down 52% from a year earlier.
The company made an attempt to acquire GrubHub last year as it sought to expand its food delivery services and increase revenue. As the GrubHub deal failed, Uber acquired Postmates for approximately $2.65 billion in an all-stock transaction. Early in the month, Uber announced they have reached an agreement to acquire Drizly, leading on-demand alcohol marketplace in the United States, for approximately $1.1 billion in stock and cash deal expected to close in the first half of the year.
It also worked to cut costs: shutting down service in China where it’s becoming expensive to operate, cutting staff and selling off its driverless and flying car startups. Uber CEO Dara Khosrowshahi said the company will henceforth focus on “profitable growth”, which means cutting costs as low as possible and focusing on the division that brings in more revenue.
Uber cut about 25% of its workforce in the first half of last year as the pandemic’s grip tightened.
Winning the prop.22 against the state of California, to classify its drivers as independent contractors, lent credence to Uber’s quest to cut cost. Experts said the win will help the company to cut labor costs by as much 30%, as it shields the company from being governed by California’s labor laws that ensure minimum wage, health plan and other entitlements for workers.
Uber recorded 144.3 million trips, 24% decline year-on-year, a record that its betterment in 2021 depends mainly on vaccine roll out. Lyft, Uber’s US competitor is also counting on the vaccine distribution to scale up in the second quarter.
Lyft, which also suffered a heavy decline due to the pandemic, is hoping for a rebound when people return to pre-pandemic normality. The company said it has set ahead-of-target cost cuts that will help it achieve a profit on an adjusted basis of earnings before interest, taxes, depreciation and amortization.
“Based on the improvements we’ve made, there is a chance we can achieve profitability in Q3. Obviously, pulling in profitability would require a strong summer rebound,” Lyft Chief Financial Officer Brian Roberts said.
The company said it shaved off more costs than originally anticipated; including head-count reductions and lower costs for software hosting services, payment processing and insurance, and it spurred the lower-than-expected loss it incurred in the last quarter of 2020.
The company’s Q4 report shows nearly $570 million revenue, a 44% drop year-on-year but 14% growth compared to Q3 revenue. Just like Uber’s, the result beat analysts projection, which in this case, was put at $562 million. There was an adjusted EBITDA loss of $150 million in the fourth quarter, lower than the $185 million loss predicted by analysts.
Lyft’s ride volume dipped 52% in December and 51% in January compared to the previous year. The company said it is expecting to see a lower volume in the first quarter of the year compared to the last quarter of 2020.
While Uber is focusing on Eats and alcohol delivery, Lyft said its plan is to cut an additional $35 million in costs in the first quarter of 2021.
John Zimmer, the company’s president told Reuters: “As riders increase … those lower costs will also help drive higher contribution margins.”
The company said its number of active riders in the fourth quarter decreased by more than 45% on a yearly basis to 12,552, but revenue per active rider rose by $1 to $45.40 – a record number.
Lyft said they will focus on moving people not goods for now, although the company announced late last year it’s working on a white-label or non-Lyft-branded platform to allow deliveries between different businesses for groceries, food and packages.
Unlike Uber that is focusing fully on delivery, Zimmer told Reuters that the Lyft delivery platform is still early in the process and that the business would just be additive, with the company hoping to announce partners at the middle of this year.