While it's a rough time for everyone, it's especially difficult to run a business that requires people to cram into a confined space for 15-20 minutes at a time. In a pandemic, when people aren't traveling, or going to movies, or commuting to the office, or really going anywhere, ride-sharing is not exactly a thing. At least not a profitable thing, according to Uber's earnings report on Thursday.
You can imagine, then, that companies like Uber are having a particularly tough time. Uber was already having a tough time, though. It has faced intense criticism over how it treats its drivers. California just filed a lawsuit earlier this week that accuses Uber of wage theft as a result of how it classifies drivers. Last year, that state passed a law that forces companies to classify gig workers as employees, not contractors. In New York, a judge ordered the company to pay drivers unemployment benefits.
Then there was the fact that it has historically had a hard time finding a way to make money, preferring instead to spend on things like driverless cars. Apparently, if the drivers complain enough about how they're treated, the easiest thing to do is find a way to no longer need drivers? I guess that makes sense--it just doesn't make money.
Those challenges have only increased over the past few months, which means that the fact Uber lost only $1.8 billion last quarter is actually good news. Sort of. That is, if by good, what you really mean is not catastrophic. That is exactly what it could have been considering ridership is down 75 percent in the past three months compared with last year.
In the previous quarter, for example, when most people were under stay-at-home orders, Uber lost $2.9 billion. It's true, $1.8 billion is less than $2.9 billion.
The company's revenue was also slightly higher than analysts expected, which, again, is good.
While the number is a big deal, more important is the reason. As Uber's ride-sharing business has fallen, its delivery service has seen tremendous growth, doubling year over year. That makes a lot of sense: People aren't taking an Uber to go out to dinner--they're just having the driver bring dinner to them.
Again, though, Uber still hasn't found a way to make Uber Eats, the food-delivery part of its business, profitable. It's getting there, and its announcement last month that it was buying rival delivery service Postmates is a step in that direction.
It's hard to know in the middle of a pandemic what anything will look like in the future, but I'd be willing to guess that for Uber, it will include a lot more delivering food than sharing rides. Focusing on that part of the business is a great example of understanding a challenge and positioning your company in a way that allows you to adapt and grow.
Uber can't continue to lose $1.8 billion every quarter. Focusing its business on the areas of opportunity means it might just be able to do something about it. While losing that much is never good for any business, in this case, it just happens to be the best news Uber has gotten in a while.