Uber’s Business Is Roaring Back Amid Economic Reopening

The COVID-19 pandemic expectedly wrecked Uber’s (NYSE: UBER) business last year as broad swaths of the population stopped commuting and traveling recreationally. In an effort to mitigate the bleeding, the entire ride-sharing industry quickly tried to pivot to other services such as food delivery. 

That strategy mostly worked: A 130% surge in Delivery bookings (primarily Uber Eats) helped offset a 50% plunge in Mobility bookings in the fourth quarter for Uber. If we zoom out a bit, here are Uber’s bookings for its two main businesses over the past two years.

Segment2019 Bookings2020 BookingsYOY Change
Mobility$49.7 billion$26.6 billion(46%)
Delivery$14.5 billion$30.2 billion109%
Data source: SEC filings

As vaccine distribution accelerates and economies start to reopen, Uber is seeing a massive resurgence in its core Mobility business.

Riding the recovery

In a new regulatory filing, Uber said that total gross bookings in March 2021 hit an all-time high. This was the best month for the Mobility segment in a year, after the onset of the public health crisis in March 2020, with Mobility gross bookings reaching an annualized run-rate of $30 billion. 

At the same time, the momentum that Uber and other ride-sharing companies have built from pivoting to delivery has sustained. Uber says that Delivery gross bookings are also at record levels, with an annualized run-rate of $52 billion. That would put annualized gross bookings for Uber’s two primary businesses at $82 billion, although it’s worth remembering that run-rate metrics can be misleading since annualizing any metric ignores seasonality. 

For reference, total gross bookings in 2020 were $57.9 billion, down from $65 billion in 2019 due to the pandemic. Uber also has a small Freight business but bookings are fairly negligible compared to Mobility and Delivery. Freight gross bookings were just $1 billion in 2020, up from $737 million in 2019.

Ride-sharing demand is accelerating so quickly that the company is facing a driver shortage. Uber plans to invest more in incentives in order to attract more drivers to the platform.

“As vaccination rates increase in the United States, we are observing that consumer demand for Mobility is recovering faster than driver availability, and consumer demand for Delivery continues to exceed courier availability,” Uber wrote in the filing.

As part of its push into delivery services, Uber said last summer that it would acquire Postmates for $2.65 billion in an all-stock deal. That transaction closed in December, so Postmates’ financial performance has only been included in Uber’s consolidated results for a short period of time. The acquisition contributed 8 percentage points of growth, according to CFO Nelson Chai.

Uber remains optimistic about hitting its goal of achieving profitability on an adjusted EBITDA basis in 2021. The company’s Mobility segment is already profitable by that measure, generating $1.2 billion in adjusted EBITDA in 2020 while the Delivery business posted an $873 million adjusted EBITDA loss last year.

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Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool recommends Uber Technologies. Millennial Money is part of The Motley Fool network. Millennial Money has a disclosure policy.

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