Uber posts better-than-expected third-quarter earnings but stock still drops

The ride-hailing company is coming through three rounds of layoffs, turf battles in London and New York City, and new gig-worker legislation in California.

Dara Kerr Former senior reporter
Dara Kerr was a senior reporter for CNET covering the on-demand economy and tech culture. She grew up in Colorado, went to school in New York City and can never remember how to pronounce gif.
Dara Kerr
3 min read
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Uber's first six months as a newly minted public company haven't been easy. It's seen three rounds of layoffs, the departure of three board members and a share price that's fallen more than 30%.

On Monday, the ride-hailing company reported third-quarter earnings that suggest the situation might be stabilizing.

For the three months ended Sept. 30, Uber posted a loss of $0.68 per share, better than the average estimate of $0.81 per share loss analysts surveyed by Yahoo had forecast. Revenue rose 30% from a year earlier to $3.81 billion, beating the average analyst forecast of $3.69 billion.

All told, Uber lost $1.16 billion this quarter, far less than the record-breaking loss of $5.2 billion it posted last quarter, but still wider than $986 million loss recorded a year earlier. The company forecast reaching profitability for the full year in 2021 as measured by EBITDA, a measurement that excludes some costs.

Still, Uber shares fell 5.53% to $29.36 in after-hours trading. 

Uber has faced a slew on internal shakeups since it debuted on Wall Street in May. The company lost three board members, including entrepreneur Arianna Huffington, and both its COO and chief marketing officer also stepped down. The company laid off nearly 5% of its staff in three rounds of cuts. Two of those rounds happened in the third quarter.

The ride-hailing company has also confronted outside challenges in two of its major markets: London and New York City. In London, Uber got a two-month operating permit though it expected to get a five-year OK. In September, Uber sued New York City saying new congestion rules threatened its business model.

The biggest threat to Uber and its rival Lyft, however, appears to be California, their home state.

In September, Gov. Gavin Newsom signed AB 5, legislation that could require companies that use independent contractors to reclassify their workers as employees. Uber and Lyft fall squarely in this category since they classify drivers as independent contractors. Many drivers say this system has led to exploitation. But both ride-hailing companies say the success of their business models hinge on drivers staying independent contractors.

Uber and Lyft are backing an initiative that they say would maintain flexibility for drivers while providing for a minimum guaranteed earnings, a healthcare stipend and occupational accident insurance.

"This is going to take dialogue," Uber CEO Dara Khosrowshahi said during a conference call on Monday. "We're up for that dialogue."

It hasn't been all bad news for Uber. The company has leaned into its Uber Eats food delivery business over the last couple of months. Even though Uber has lost millions on subsidizing and expanding Uber Eats, it's seen as one of its better revenue-growing services.

To capitalize on that, Uber redesigned its app in September to put Eats at its front and center. When users open the app, they now are given a choice of hailing a ride or ordering food. Uber also acquired majority ownership in the grocery delivery startup Cornershop in October. Uber CEO Dara Khosrowshahi said this move is part and parcel of his plan to move Uber beyond just rides.

"Whether it's getting a ride, ordering food from your favorite restaurant, or soon, getting groceries delivered, we want Uber to be the operating system for your everyday life," Khosrowshahi said in a statement in September. 

First published at 1:40 p.m. PT on Nov. 4.
Updated at 3:32 p.m.: Adds comments from conference call.