Uber Reports Lower-Than-Expected Profit Amid Rising Costs and Strong Dollar Forecasts Drop in Bookings

Uber Technologies on Wednesday reported a lower-than-expected profit in the October-December period due to rising costs. The company forecasts first-quarter bookings will fall short of estimates because of a strong dollar, which caused its shares to decline 6% before the bell.

The forecast overshadowed the San Francisco-based company's fourth-quarter revenue beat, which was supported by stable ride-hailing demand for office commutes and a successful delivery business during the holiday season.

As the dominant ride-hailing service in North America, Uber is working to convince investors of its growth potential by attracting more businesses and teenagers while expanding to less saturated markets.

Uber's business-focused service saw a 50% surge in bookings for the last three months of 2024, driven by return-to-office mandates. Similarly, Uber for Teens experienced a substantial increase and is now available in about 50 countries.

Adjusted profit for the last quarter of 2024 was reported at 23 cents per share, significantly lower than the estimated profit of 50 cents, according to data from LSEG.

The company’s ride-hailing revenue increased by 25%, while delivery revenue rose by 21%, both exceeding estimates. Total revenue reached $11.96 billion, surpassing analysts' average estimate of $11.77 billion.

Gross bookings of $44.2 billion were also above expectations of $43.45 billion. However, total costs and expenses rose by 20.5% to $11.19 billion, leading to an operating income of $770 million, which missed estimates of $1.22 billion.

CEO Dara Khosrowshahi announced plans to drive growth in 2025 by providing better customer rates, partly by moderating increases in insurance charges, a major expense for ride-hailing firms in recent years. He stated, "To maximize demand, we remain committed to keeping prices as low as possible, passing through only the insurance cost increases to consumers," and added that he anticipates only a marginal increase in U.S. UberX prices in 2025.

Rival Lyft is actively working to attract customers from Uber through competitive pricing and new features, including Price Lock, which guarantees prices for daily commuters.

Uber expects first-quarter gross bookings between $42 billion and $43.5 billion, anticipating a 5.5 percentage point impact from the strong dollar. Analysts are projecting bookings of approximately $43.42 billion. The midpoint of its adjusted core profit forecast for the first quarter, set at $1.79 billion to $1.89 billion, is also slightly lower than analysts' estimates of $1.85 billion.