The company’s second-quarter revenue declined 27% to $2.24 billion, roughly in line with analyst estimates. Losses narrowed to $1.8 billion from $5.2 billion during the same quarter last year.
Uber’s shares fell 4% to $33.37 in after-hours trading.
The biggest concern was that revenue from rides bookings, or the amount of money Uber collects before paying drivers, fell 73% year over year to $3 billion for the quarter. But food delivery bookings, which includes the Uber Eats meal delivery service plus grocery deliveries, excluding driver pay and discounts, more than doubled to $7 billion.
“Our delivery business alone is now as big as our rides business was when I joined the company in 2017,” said Uber CEO Dara Khosrowshahi. “We’ve essentially built a second Uber in under three years.”
The news comes as the coronavirus continues to wreak havoc on travel-related businesses, including ride-hailing companies. It has been particularly vexing for Uber, which has been trying to reduce its massive losses and deliver on a promise to become profitable, excluding certain expenses, next year.
At the same time, the pandemic has led to explosive growth in food delivery, an industry in which Uber is expected to be the second largest player following its $2.65 billion acquisition of Postmates, just behind rival DoorDash.
Khosrowshahi said though much of the growth in food delivery is due to the coronavirus, he believes that many consumers will continue to use the service after the pandemic ends. He added that the Postmates acquisition will increase Uber’s market share in certain cities as well as improve the choice of restaurants it serves.
Meanwhile, Uber has been working to expand to deliver home products, groceries, and pet supplies.
Monthly active users of Uber Eats during the quarter was up 7%. The amount of money customers spent per order on the service jumped by double digits during the quarter.
Though Uber’s delivery services are growing, the business segment remains highly unprofitable. Losses for the segment, minus expenses, narrowed 19% to $232 million compared to the same quarter last year.
Khosrowshahi said that like the rides business, it’s only a matter of time before the food delivery profit margins improve. However, he didn’t say when that improvement would happen.
“We stand purely on the belief that pure-play delivery can and will be profitable,” Khosrowshahi said. “It’s only a question of when.”
As for rides, Khosrowshahi tried to reassure investors that the lull is temporary. For example, in Hong Kong, New Zealand, and Sweden, Uber said rides related to commuting and social occasions had already rebounded above pre-coronavirus levels. But rides to airports in those countries were still below pre-coronavirus levels.
Khosrowshahi tried to downplay the long-term impact of working from home during the pandemic on the rides business. In certain overseas countries, he said Uber is seeing rides recover and even surpass the pre-COVID era.
“We’ve been desperately looking for trends to identify ways in which the future would be different from the past, and frankly, we haven’t come up with any,” Khosrowshahi said. “The reality we’re seeing is as cities open up, people get back to work.”
However, the company expects to have to increase U.S. driver bonuses, which it reduced to improve profitability. Drivers in the U.S. have been slower to return to the service compared to other countries, Khosrowshahi said, suggesting that unemployment benefits may also have played a role in the country’s lag.
Said Khosrowshahi, “I think we pivoted in a big way” and “have secured the path forward.”