:Uber Technologies Inc on Wednesday reported widening losses as it spent more to entice drivers to return to its platform, sending shares of the ride-hail and food delivery company down in after-hours trade.
Investors sold the shares despite Uber management's assurances that the company can deliver a sharp turnaround in profitability even as New York and other major cities reimpose some pandemic restrictions.
Uber posted an adjusted US$509 million second-quarter loss before interest, taxes, depreciation and amortization - a metric that excludes one-time costs, including stock-based compensation - widening losses by nearly US$150 million from the first quarter.
Analysts on average had expected the company to report an adjusted EBITDA loss of around US$324.5 million, Refinitiv data showed.
Shares were down 5per cent in after-hours trading after closing the regular session down 2.2per cent.
The company also warned investors that uncertainty from the Delta variant of the coronavirus continues to impact visibility into recovery.
But Uber Chief Executive Dara Khosrowshahi told analysts on a conference call that the company's food delivery business provided a hedge against potential ride-hail declines and that July trends support the company's confidence for the second half of the year.
Gross bookings during the second quarter reached an all-time high of nearly US$22 billion, with more passengers returning for trips while food delivery orders also increased.
Nevertheless, the earnings call was dominated by questions over driver supply and the ongoing impact of the pandemic.
Investors are worried about the ongoing shortage of drivers in the industry as demand ramps up. Uber's smaller rival, Lyft, on Tuesday said it expected limited driver supply to continue in the next quarter, requiring further investments in driver incentives.
Uber said riders returned to its platform in greater numbers in July and it expects the trend to continue in the coming months, together with strong food delivery orders.
Uber reaffirmed its goal of hitting profitability on an adjusted EBITDA basis at the end of this year and said it would reduce losses to US$100 million in the third quarter.
That assumes the more contagious Delta variant does not reverse a gradual reopening of the U.S. economy, an issue that Lyft said on Tuesday it was monitoring.
Uber on Wednesday said monthly active drivers and food delivery workers had increased by nearly 420,000 from February to July. Passenger wait times in major U.S. cities also decreased during that time, the company said.
Uber spent a massive US$250 million in driver incentive investment in the second quarter, which increased losses at its ride-hail business. Uber said mobility profitability will expand significantly as U.S. and Canadian driver investments fade, a trend it has witnessed in Australia and other markets.
U.S. driver supply increased by 30per cent from June to July, even as incentives were reduced.
"We invested early and aggressively and are seeing very positive momentum," Khosrowshahi said.
The company had urged U.S. drivers to take advantage of the incentives before pay drops to pre-COVID-19 levels as more drivers return to the platform.
Total costs and expenses in the second quarter jumped by over 57per cent to US$5.12 billion year over year.
Uber also took advantage of unrealized gains in its investments in Chinese ride-hail company Didi Global and self-driving company Aurora to post second-quarter net profit of US$1.1 billion.
Uber executives said the company might sell some of those positions after clearing regulatory restrictions if the market offered reasonable values for them.
Uber's delivery unit, which includes restaurant delivery service Uber Eats, narrowed losses on a quarterly basis and more than doubled gross bookings from last year.
Overall, the company reported second-quarter revenue of US$3.9 billion, beating average analyst estimates of US$3.75 billion, according to IBES data from Refinitiv.
Uber doubled down on Uber Eats, which has been a pandemic winner, by acquiring rival startup Postmates and last-mile alcohol delivery company Drizly.
Uber is also expanding its grocery delivery business, having announced partnerships with Albertsons Companies Inc and Costco Wholesale Corp.
In July, Uber also announced the acquisition of logistics company Transplace for about US$2.25 billion in a boon to its freight delivery unit, which is now expected to break even on an adjusted EBITDA basis by the end of 2022.
(Reporting by Tina Bellon in Austin, Texas and Akanksha Rana in BengaluruEditing by Peter Henderson and Matthew Lewis)