All's well in Uber land?

Ever since the Uber Files came out we've been writing about what's wrong with this company and asking why so many powerful people (politicians, investors, regulators) did not see the problems earlier. But Uber's second quarter report would make you think that all that discussion was happening on a different planet: it's all smiles in the house of Dara Khosrowshahi. 



Uber once again made a loss, of $2.6 billion, but that was significantly less than the $5.9 billion in the first quarter, and the company beat analyst expectations for revenue by about €600 million. It also reported $382 million of free cash flow for the first time, which is the cash left over after operating expenses and capital expenditures are paid for. Investors responded: Uber shares went up 18.9% on the day the second-quarter figures were released.



What explains this slightly rosier picture for the company? First, more people want to get out of the house as the pandemic eases. Flights are up and so Uber trips to airports are up too. In general, there is a shift in consumption patterns from retail to services, which Uber is benefiting from. Uber is still getting slightly more bookings from Uber Eats than from the ridehail service, but while the latter is up 12% on this time last year, Uber cabs is up 57%. 



Secondly, Uber seems to be stemming some of the major problems it has had in attracting drivers into their cars, despite fuel prices continuing to rise (although not as much in the US as in Europe). “Driver engagement reached another post-pandemic high in Q2, and we saw an acceleration in both active and new driver growth in the quarter,” Khosrowshahi said. There could be multiple factors at play here: it is much debated among economists whether the US is in a recession or not, but either way there may be some people who have lost their jobs and so have picked up driving to fill the gap. Some drivers may only feel it's safe to start driving again after they stopped at the height of the pandemic. 



Whatever exactly is going on, there's a good chance that Q3 and Q4 will be uglier for Uber. Why? Because the problems of surging inflation and recession are only intensifying, and this will hit Uber Eats in particular, as consumer spending is squeezed. All of the food delivery companies are struggling in the present climate, and the Q2 results show Uber Eats growth is already slowing. As for ridehail, we'll see if the surprising driver growth can be sustained if fuel prices continue to rise.



The real damage from Uber Files to Uber was always likely to be long-term. It's not finding the corridors of political power as open to them as before which is likely to hurt the company (presuming politicians know how to learn a lesson). Nonetheless, the Q2 figures show Uber's resilience shouldn't be underestimated, even if it still can't turn a profit.



Ben Wray, Gig Economy Project co-ordinator

Gig economy news round-up



• JUST EAT WRITES DOWN VALUE OF GRUBHUB BY €3 BILLION: Just Eat Takeaway, Europe's biggest food delivery platform, has written down the value of US subsidiary GrubHub by €3 billion, despite only purchasing the company last year for €7.3 billion. The company says it is continuing to explore options for selling GrubHub, as the food delivery market faces a slowdown as the pandemic eases and inflation skyrockets. On Wednesday [3 August], Just Eat reported a 7% fall in orders in the first half of 2022 compared to the same period last year. The company's management faced severe criticism at its AGM earlier this year, when investor CatRock capital described the GrubHub deal as a "mistake" which led to "a loss of trust" with investors when the company provided "misleading financial disclosures". Read more here.
• GORILLAS PULLS OUT OF PARTS OF GERMANY AND NETHERLANDS: The grocery delivery firm Gorillas has retreated almost completely from the Ruhr region of Germany, as the company battles for financial survival. At the end of May the Berlin-founded platform announced it was leaving four European countries to concentrate on its "core markets", which were presumed to be Germany and the Netherlands, where the company is now headquartered. However, the exit from Bochum, Gelsenkirchen, Dortmund and Münster in the Ruhr region, after the company also stopped operating in six Dutch cities, means it is now focusing efforts only on its most important urban centres. The company, which was Europe's fastest ever 'Unicorn' in 2021 and was valued at €3 billion as late as October last year, is thought to be burning through €75 million a month as it struggles to adapt to the inflation crisis. It was reported last week that a cash injection of €245 million from existing investors is now expected, as the management look to find a sustainable path forward. Read more here.
• UBER TO GIVE DRIVERS THE OPTION TO SELECT RIDES BASED ON LOCATION AND PRICE: Uber have announced that they will give drivers the option to select rides based on the destination and the price of the ride, a demand that many drivers have been making. The move, which is Uber's latest attempt to attract drivers after the pandemic, will first be rolled out in the United States, and is expecting to come to Europe shortly after. The scandal-hit firm has also announced a 'Trip Radar' option whereby drivers can also see other options for rides nearby, rather than just being given one option. A bank card will also be offered which the company claims will help with the cost of fuel. Read more here. 
• CABIFY EXITING BARCELONA: Spanish private car hire (VTC) platform Cabify has announced it will exit Barcelona, after the Catalan Parliament introduced tough new regulations on VTC operators. The Decree Law meant that VTCs which were under 4.9 metres in length would no longer be permitted, effectively restricting VTCs to passenger vans and limousines. In announcing its exit, Cabify released adverts all over Barcelona which stated: 'Raise your hands if you want to return to queue to go home.' The posters add: 'On October 1, the new regulations come into force that prevent VTCs from continuing to operate and leave the taxi as the only option in Barcelona.' Regional parliaments across Spain have to pass new laws by 1 October regulating VTCs, with Catalonia's seen as the strongest so far in favour of the taxi. Read more here.
• GLOVO RIDERS PERSONAL DATA FOR SALE ON DARKWEB: The personal data of thousands of Glovo riders, including bank details and home addresses, as well as information on six million orders which have taken place, has been made available for sale on the darkweb. Glovo, Spain's largest food delivery platform which operates in multiple countries, said the information was stolen in a cyberattack in April last year, and that it is "proactively taking steps to remove this data given its reappearance". The Data Protection Agency has been informed of the attempted sale. The hacker had reportedly undertaken the cyberattack on an old administration panel. "At Glovo we take security very seriously," the company added. "The investigation into this matter was concluded in 2021 and was accompanied by a full audit of the integrity of our systems." Read more here. 
• LIEFERANDO LAUNCHES GROCERY DELIVERY SERVICE IN BERLIN: Lieferando, the German brand of Just Eat, has launched Lieferando Express in Berlin, the company's first move into the grocery delivery market in Europe. Lieferando Express will make deliveries within 25 to 35 minutes, with a 'dark store' established in western Berlin. The move brings Lieferando into direct competition with the new grocery delivery platforms which emerged in recent years, including Gorillas, Getir and Flink, which are all active in the German capital. Lieferando are describing the move as a "pilot project". In Canada, Just Eat offshoot 'Skip the Dishes' operates a grocery service. Wolt, owned by US delivery platform DoorDash, had recently announced that it was closing its 'Wolt Markets' grocery delivery option in Berlin due to the "high investments" required to reach profitability. Read more here.