With Cornershop and Postmates, Uber expands food delivery further and sees ride demand pick up

In Latin America, Uber's revenue hit $302 million in the last quarter of 2020

An Uber pick-up location is pictured in San Diego, California
Photo: Reuters/Mike Blake
  • Uber managed to reduce losses as growth on its delivery units advances and outpaces drops in ride-hailing revenue;
  • Its groceries and non-food delivery businesses are gaining ground, also in Latin America, especially with the completed acquisition of Cornershop in Mexico for groceries;
  • In the region as a whole, Uber recorded $302 million for the quarter ended in December 2020, down 43% year-over-year.

Uber on Wednesday said revenue at its ride-hail and delivery businesses increased on a quarterly basis and said it was well on track to achieve its target for an adjusted profit by year-end.

In Latin America, Uber’s revenue hit $302 million, down 43% compared to the $531 million reached in the last quarter of 2019. As a comparison, Uber’s revenue on US and Canada beat $1.8 billion in the fourth quarter of 2020, down 26% year-over-year.

Uber’s 2020 Q4 earnings release. Image: Uber Investor/ Reproduction

Uber and Transit, a feature within Uber’s app to create multimodal trips by finding combinations between UberX and public transport, rolled out in Mexico City, Uber informed, following the Q3 2020 launch in Sydney and Chicago.

As an effort to scale its grocery and non-food delivery businesses, Uber completed the acquisition of Chile-based Cornershop in Mexico on January 11, saying that it believes this “will accelerate the grocery business there.” As for new partnerships in the region, Uber also highlighted the ones with supermarket chain Muffato and pharmacies chain Raiasil in Brazil.

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“We made some big moves this year, acquiring businesses like Cornershop and Postmates while divesting others like ATG and Jump, and structurally lowering our cost base,” said CFO Nelson Chai. “These decisions have resulted in a much more focused and ultimately stronger company.”

Shares fell 2.4% in after-hours trading after gaining around 6% during the day in reaction to smaller ride-hail rival Lyft saying on Tuesday it might become profitable during the third quarter, three months ahead of a previous goal.

Uber reported a loss on an adjusted basis before interest, taxes, depreciation and amortization of $454 million, significantly narrower than analysts’ average expectations for a $514 million loss, according to Refinitiv data.

Adjusted EBITDA, which excludes the cost of the company’s extensive stock-based compensation and other potentially significant items, is the profitability metric Uber uses.

Uber reported $3.17 billion in total revenue in the months from October through December.

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Fourth-quarter mobility revenue, largely comprised of rides, declined by 52% from last year, but at $1.47 billion was up 8% on a quarterly basis despite new lockdown measures in the United States, Europe and the Middle East.

Orders at Uber’s food delivery platform, Uber Eats, further grew during the fourth quarter, as many countries issued new lockdown orders, closing restaurants and prompting many people to order in.

Delivery revenue more than tripled from last year and at around $1.36 billion, grew 19% compared with the third quarter.

Uber has expanded its footprint in the competitive space and acquired smaller food-delivery rival Postmates for $2.65 billion and alcoholic beverage delivery service Drizly for $1.1 billion.

Both deals were largely stock-based, with the Drizly deal expected to close later this year.

Uber also said it had further lowered costs in the fourth quarter, with total costs and expenses dropping 14% in that period.

Following a directive by Chief Executive Dara Khosrowshahi to focus on the company’s core businesses – rides and delivery – Uber has also slashed costs by selling adjacent units.

The company in December sold its self-driving Advanced Technologies Group (ATG) in a $4 billion equity deal at a steep drop in valuation. Khosrowshahi at the time said the deal would accelerate Uber’s profitability goal.

The same month, Uber also handed over the keys to its air taxi business Elevate, another cash-burning unit, without disclosing the terms of the deal.

This story is being updated

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