Uber, the ride-hailing giant, is anticipating a robust holiday quarter, expecting profits to exceed analysts’ projections.
This optimism follows a period of hindered growth due to accounting changes made between July and September, impacting revenue recognition in its ride-hailing and food-delivery divisions.
These changes had an eight-percentage-point impact, causing revenue to fall short of third-quarter expectations.
Despite facing fierce competition from Lyft, which has lowered fares to attract customers amidst concerns about ride-share demand amid rising inflation, Uber’s CEO, Dara Khosrowshahi, expressed confidence.
He stated, “Consumer demand on our platform remains healthy as we enter the busiest period of the year.” Khosrowshahi also noted that this positive trend continued into the fourth quarter, with record-high numbers in October for overall trips and gross bookings, driven by strength in both mobility and delivery services.
Uber’s fourth-quarter adjusted core profit, a key profitability metric, is projected to be between $1.18 billion and $1.24 billion, surpassing estimates of $1.15 billion.
Gross bookings, representing the total value of its services, are expected to range from $36.5 billion to $37.5 billion, compared to the anticipated $36.31 billion.
Analysts at William Blair highlighted Uber’s strong driver supply, with a record 6.5 million active drivers in the third quarter, positioning the company favorably for generating strong results.
The optimism surrounding travel demand during the holiday season, a critical period for various industries such as airlines and hotels, is expected to benefit Lyft as well, as the company reports its earnings.
In the third quarter, Uber’s revenue experienced its slowest growth since 2021, reaching $9.29 billion, missing the estimated $9.52 billion.
However, the adjusted core profit of $1.09 billion exceeded expectations of $1.02 billion, although net earnings per share fell short by 2 cents.
Following volatile premarket trading, Uber’s shares surged by more than 2%.
The company’s outlook for the holiday quarter suggests that it is poised to bounce back from its recent challenges and deliver strong results during this crucial period.