Uber posted earnings after the closing bell, the company's losses narrowed but revenue fell short. Ygal Arounian tells Yahoo! Finance the company is also betting big on its Uber Eats business.
Video Transcript
SEANA SMITH: Ygal, what-- I guess, what stands out to you in this report? We're seeing better than expected numbers from their Eats business, the ride business still under a little bit of pressure. The stock here off just around 2%.
YGAL AROUNIAN: Yeah, I think the thing that stands out the most is, I think, following along what we saw from Lyft last night, is the better EBITDA and Uber didn't really change anything around their language on path to profitability like Lyft did yesterday, but continuing to kind of move along that line of getting to profitability by the end of the year overall and reaching there at a-- with lower demand than was originally projected. The Eats business is on fire, and that's really important. That's carried them through the pandemic. That's been a really important piece for them as well.
ADAM SHAPIRO: So what will the analysts on the earnings call-- what is the metric that's going to be the key metric? Is it going to be all about the delivery business, or is it going to be about gross bookings in the traditional core business?
YGAL AROUNIAN: You know, I think it's going to be both. So, you know, people aren't really surprised at the fact that rides have been challenged. It's why you saw Lyft stock perform so well today, even though their revenue guide missed. Their revenue numbers missed.
The pandemic has gotten worse, and the demand for mobility has gone down. So analysts are going to want to try to understand the trends coming out over the next couple of months, what they're seeing in specific cities, maybe cities where the pandemic hasn't had as much of an impact, or it's gotten better.
Also, importantly, people are going to want to understand what's going to happen as we lap the strong growth from the Eats side and the delivery business. Uber's doing a lot there. It's turning into a lot more than just a restaurant food delivery. They're going into groceries. They just acquired Drizly, which is an alcohol delivery service. So they're really turning that into a last mile delivery platform well beyond restaurants. That's a big opportunity for them long term.
But as people kind of come out and out of their homes and the weather warms up and people want to go out to eat a little bit more in the back half of the year, or even really starting in 2Q, what those numbers are going to look like is going to be of interest as well. And then, of course, the profitability, which is top of mind for everybody.
SEANA SMITH: Ygal, I want to ask you a little bit more about that profitability. In their release, they say that they remain on track-- "well on track" was the exact words-- to achieve 2021 profit goals. Did this come to you as a surprise, or was this something that you were expecting to hear from Uber today?
YGAL AROUNIAN: Oh, it's actually not a surprise at all. This is-- the pandemic was obviously a challenge for Uber on the rideshare business, and really, overall, even though it supported Uber Eats so much. But what we saw from Uber and Lyft over the course of the pandemic is they took-- they both took the opportunity to right size the ship. They took out a lot of costs from the business.
And even though they have been challenged in at least certain pockets, they're going to come out of this much better positioned with a lower cost profile, taking a lot of those expenses, the unnecessary expenses, and the fat out of the business. And that's really going to let them leverage the growth to profitability in a much stronger way than they would have been able to without the pandemic hitting and kind of right sizing.
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 this. Given the fact that delivery is so key to them at this point, is there room for another acquisition to grow that side of this?
YGAL AROUNIAN: It's possible. I mean, we've seen a couple of things. And I think they're much better positioned here than we were a year ago or a year and a half ago, where the delivery business was just so cutthroat. They acquired Postmates. There's been some rationalization within the restaurant delivery side. They acquired Cornershop, which was a Latin American company, and they're building that out in the US as well to deliver groceries. And now they have alcohol delivery.
There are likely other pockets where they can kind of continue to tack on. But now they have really important pieces to a lot of last mile delivery options. They've also launched some things internally, like delivering essentials from pharmacies and partnerships with CVS and Walgreens. They've done a lot to move Eats from just restaurant to last mile as a whole.
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