Uber and Lyft saw theirs Rides are sinking in the last few months mainly because of the coronavirus pandemic. And based on corporate earnings in the third quarter, that doesn't seem to be changing. However, with Uber and Lyft maintaining an optimistic tone and promising profitability in the not-too-distant future, stock prices have fallen only marginally, ranging from 2% to 5%.
"It's hard to believe it's been eight months since I first spoke to you about the coronavirus pandemic," said Dara Khosrowshahi, Uber's CEO, during the company's earnings call last week. "Without question, its impact on the world was one of the most significant events of our lives. And we as a company have moved quickly to respond."
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Lyft executives expressed a similar sentiment in their company's call for profits on Tuesday, saying they see the Lyft ride business gaining traction in many cities across the United States, along with the growth in the scooter and bicycle business.
Both Uber and Lyft extolled theirs great political victory in California. Along with several other gig economy companies, they sponsored a government election measure, Proposition 22, to ensure they can classify drivers as independent contractors rather than employees. After those who drove the measure spent $ 205 million on the campaign, the proposal was passed with 58% of the vote.
"We believe the California bottom line is a win, win, win," Lyft CEO Logan Green said during the company's earnings call. "Beyond California, we continue to work with policy makers across the country."
Here are five takeaways from the results of the two hail shipping companies in the third quarter:
Declining income and a lot of losses
Both Uber and Lyft saw sharp sales declines. Uber's revenue was down 18% and Lyft's was down 48% year over year. Both companies also posted large net losses, with Uber posting a loss of $ 1.1 billion from July through September and Lyft announcing a loss of $ 459.5 million over the same period.
Win Proposition 22
Despite the losses, both companies have spent significant amounts of time in California over the past few months. Uber contributed approximately $ 59 million to the battle at Proposition 22, and Lyft put in approximately $ 49 million. It all started last fall when the state adopted law AB5Companies had to reclassify drivers as workers and provide these workers with health and safety. Both companies said such reclassification and additional costs could decimate their businesses. So Uber and Lyft brought the issue to the electorate. Your Proposition 22 campaign that covered the state in advertisements, Text messaging and mailers, was the most expensive election campaign in California history.
"It's a clear, clear, and decisive victory that marks a turning point in the conversation," said John Zimmer, president of Lyft, in the third quarter earnings call. "I firmly believe that other states and policymakers will see this as a turning point."
Not many drivers
In addition to falling revenues, both Uber and Lyft have seen a significant drop in the number of drivers on their platforms over the past few months. Companies attribute this to the coronavirus pandemic, where people are still seeking shelter and no longer traveling around like they used to. Uber's active monthly drivers fell 24% and Lyft's 44% year-over-year. While these numbers seem significant, both companies reported an increase in the number of passengers using their service compared to the previous quarter. Lyft, for example, saw its active riders grow 44% from Q2 to Q3.
"The gig economy was in the eye of the dark COVID-19 storm when ridesharing Uber and Lyft stalled as the global lockdown went into effect in early March," Daniel Ives, an analyst at Wedbush, said in a statement. "Since then, however, we have seen the lift-pool increase modest and slightly faster than the road's expectations."
Grocery delivery on the rise
When people crouched at home this year and used less hail services, some people were started ordering more meals and groceries from Uber's grocery store Uber Eats. The company reported that Uber Eats gross bookings were up 135% compared to the same period last year. Uber said customers continued to use Uber Eats even in places where coronavirus restrictions had been eased.
Lyft doesn't have its own grocery delivery service on its platform, but has ditched its core transportation business during the pandemic. In October, the company partnered with grocery delivery company Grubhub to provide food delivery to restaurants to people on the Lyft membership program, Lyft Pink. The company's vice president of marketing, Heather Freeland, said at the time, "We heard from our drivers that food delivery is a benefit they wanted, so we went to work to make it happen. "
Still not profitable
Despite the emphasis on grocery delivery, neither Uber nor Lyft are profitable. Even Uber Eats is not yet profitable as a standalone company. And neither company was ever fully profitable (although Uber's amusement ride was profitable on an adjusted basis). However, during their third quarter profit calls, Uber and Lyft told investors that they were on track to meet their goal of full profitability (adjusted) before the end of 2021.
