How Uber plans to rebound from massive Q2 losses stemming from driver incentives ' TechCrunch

Uber's second quarter earnings were higher than expected, largely due to Uber's $250 million stimulus package in April that incentivizes drivers to return to Uber after a pandemic-induced shortage.The company posted a loss of $509 million before EBITDA. Lyft, by comparison, reported an adjusted EBITDA of $23.8 million in the same quarter. Uber's losses are indicative of a bigger problem facing app-based ride-hailing: The triple threat of lagging driver supplies, the cost of recruiting them, and the COVID-19 Delta variant that is looming in remote areas.CEO Dara Khosrowshahi stated that drivers are increasingly eager to get back on the roads. 60% of inactive drivers said that they would drive again within one month in June. This is an increase of 40% from April's 40%. Ninety percent of drivers said they expected to return by September. Market metrics are beginning to return to normal in many markets, with surge levels and wait time back to almost normal in Miami and Atlanta, Dallas and Houston. However, in major cities such as New York, San Francisco, and LA, the demand continues to exceed supply, and prices in later times remain high.Khosrowshahi stated that Uber expects the driver momentum that has been building over the past few months to continue even as Uber reduces its post-pandemic incentives. The problem is that the pandemic is not over. The CDC says that only 50% of the U.S. population has been fully vaccinated. It also states that the highly contagious delta variant caused between 80% to 87% of all COVID-19-related cases in the United States during the two weeks ending July. Computer models have predicted that case numbers will reach their peak in mid-August or early September. This could lead to as many as 450,000 daily cases.Driver shortages are not caused by lockdowns. Drivers don't want to risk their lives for what they often consider to be a meager salary. As Uber's losses continue and the company tries to attract more drivers, it is also a potential threat for gig workers labor rights. Uber is one of the app-based ride-hailing companies and on-demand delivery firms that have filed a petition to introduce a Massachusetts ballot measure that would make drivers independent contractors. This is similar to Proposition 22 in California last year.I accepted the incentives they offered to bring people back. I believe most drivers with any brains would do the same. Jay, an Uber driver who has been driving since 2013, told TechCrunch. Because I was losing money driving for them, I decided to stop driving once the incentives ended. It is no longer profitable to drive for them. This is why it is so difficult to get an Uber. These billionaires are out of touch and running the company to their demise.Despite these setbacks Jay references Khosrowshahi, presumably one out of touch billionaires Jay refers to, went on to tell investors that Uber plans to achieve total company EBITDA profitability before the end of this year. Uber hopes that its investments in the "earner experience" will help to retain employees.He said that our earner super app offers unique opportunities for drivers and couriers worldwide, such as a doubled down on app quality and targeted and personal reengagement campaigns.Khosrowshahi believes that if mobility continues to suffer, as it has in Sydney, Australia, due to the persistent lockdowns Khosrowshahi suggests Uber can turn to its other businesses like freight, Uber Eats, and courier service. Khosrowshahi stated that there has been a rising trend in Uber Eats and courier orders as riders decrease.Uber bought Postmates online food delivery app in November. The company claims that this has led to nearly 5 million more consumers, 160,000 couriers, and over 25,000 merchants migrating to Uber Eats from Postmates. It also helped Uber establish itself in Los Angeles as a leader in the category of food delivery in New York City.Uber has expanded into new verticals like convenience, grocery and alcohol delivery. In June, gross bookings in the United States nearly tripled from December 2020 levels, and doubled in France and the U.K.Khosrowshahi stated that the Uber platform and audience are the key differentiators. We are actually the latest player to start a delivery company. This was based on the Uber brand and the marketplace-matching technology we have, pricing technology, routing technology, etc. We have more data than anyone else. Our algorithms can be trained over much more global data points than our competitors. This allows us to create a matching, routing and incentives engine that is more personal and has greater capabilities than any other.Khosrowshahi noted that there are ops teams in all markets so the company can identify the correct inventory for each market.This all leads to lower customer acquisition costs, higher lifetime values, and greater tech capabilities. This is the difference.Khosrowshahi stated that Uber will achieve its EBITDA goals for Q4 and expects total company gross sales to reach $22 billion to $24 billion. Total company adjusted EBITDA is expected to be less than $100 million for Q3.