Uber Technologies released its second-quarter earnings this morning, revealing the first sizable profit in the tech company’s history.
- The company revealed on August 1 revenue of $9.23 billion, compared to analysts’ expected $9.33 billion, with consumer demand measured in gross bookings increasing 16% yearly.
- Uber’s shareholder prices dipped -5.9% on Tuesday morning, with shareholders unhappy with the underperforming results.
- CEO Dara Khosrowshahi tells CNBC’s Squawkbox that this quarter marked the first cashflow quarter over $1 billion in company history and that it expects profitability to continue going forward.
- The company celebrated its first-ever GAAP operating profit and increased cash flow.
- Uber also announced the upcoming departure of CFO Nelson Chai in January after he appointed a successor to his position.
Why It’s Important
Uber Technologies was founded in March 2009 and rapidly transformed into a market leader in the gig economy—popularizing the business model for rideshare services and completely supplanting the transportation industry by allowing for inexpensive rentable driving, creating gig work for hundreds of thousands of Americans willing to sacrifice their time and cars for compensation.
However, Uber’s business model has long struggled with profitability. The company operated in the red for years and struggled to break even after 14 years of service due to heavy research costs, poor pricy strategy, and high incurred legal costs. This past quarter markets the first major success for the popular app in turning a profit, although it continues to have issues.
Despite its success, Khosrowshahi also noted that the company’s cargo service Uber Freight is struggling against market headwinds, with most customers relying on Uber for services rather than shipping. Excluding Freight, the company has seen 21% year-over-year growth and shows signs of continued improvement going into the rest of the year.
“Both of these milestones [—attaining $1 billion cashflow and reaching GAAP operating profit—] were achieved through a combination of disciplined execution, record audience, and strong engagement,” says Khosrowshahi.