No part of the U.S. transportation industry is immune to the coronavirus as ride-hailing services Uber and Lyft posted substantive losses for the first quarter while also taking measure to try to stem the tide including pay cuts and layoffs.
Uber cut 14% of its workforce earlier this week after rival Lyft cut 17% of its workers, a total that rises to 22% if you count furloughed employees.
The results continued to worsen when the top two companies in the segment reported larger than expected losses attributed to the ongoing pandemic.
Uber reported a net loss of $2.94 billion for Q1, up from $1 billion during the year-ago period. The company reported $15.8 billion in revenue, which split $10.9 billion for its rides and $4.7 billion for Uber Eats — the lone bright spot in the report. Uber Eats revenue was up 54% during the quarter, in contrast to the 3% decline for its rides segment. Uber eats saw an 89% jump in bookings in April.
The company reported an adjusted EBITDA loss of $612 million, an increase of 30% year over year. Uber ended the quarter with $9 billion in unrestricted cash and equivalents to help it ride out the current storm. Uber CEO Dara Khosrowshahi elected to remain upbeat despite the tough results and times during the company’s earnings call.
“COVID-19 has had a dramatic impact on Rides with the business down globally around 80% in April,” he said. “Still, there’s some green shoots driving restrained optimism. We’ve seen week-on-week growth globally for the past three weeks. This week is tracking to be our fourth consecutive week of growth.”
He said the company would continue to refine the Eats business to make it more efficient in hopes to increase profits while it would look for ways to try to improve the company’s rides segment. However, the overall bookings were down just 40% due to the impressive results from the Eats business.
In the meantime, Lyft’s first quarter earnings report was stronger than its rivals. The company posted a net loss of $398.1 million versus a net loss of $1.1 billion in the same period of 2019. This came on revenue of $955.7 million, a 23% jump on a year-over-year basis.
Lyft reported its adjusted EBITDA Loss for Q1 was $85.2 million compared with $216 million for the year-ago period. The company said it had $2.7 billion of unrestricted cash, cash equivalents and short-term investments at the end of the first quarter of 2020.
The company also had a bright spot in its reporting. Not only is the company getting more riders, they’re spending more as well. Lyft reports a 3% increase in ridership during the quarter and a 19% jump in their revenue per active rider.
“It is now clear that the COVID-19 crisis is going to have broad-reaching implications for the economy, which impacts our business,” Lyft CEO Logan Green said in an emailed statement.
“We have therefore made the difficult decision to reduce the size of our team. Our guiding principle for decision-making right now is to ensure we emerge from the crisis in the strongest possible position to achieve the company’s mission.”
That means the company is being proactive. In addition to the aforementioned job cuts, it will cut salaries over the next 12 weeks by 30% for top executives, 20% for vice presidents, and 10% for employees. Board members will forgo 30% of their cash compensation during the second quarter.
Additionally, the company’s board of directors have voluntarily agreed to forego 30% of their cash compensation for the second quarter of 2020, the company said.