Taxi giant Uber predicted on Tuesday that strong demand in the holiday quarter would boost profits more than analysts expected, after accounting changes hampered growth between July and September.
The company’s move to change the way it processes a portion of its revenue impacted growth in its ride-hailing and food delivery businesses by eight percentage points and resulted in revenue that exceeded expectations for the third quarter.
Uber faces stiff competition from Lyft, which has lowered fares to attract customers as persistent inflation raises concerns about demand for rides.
But CEO Dara Khosrowshahi struck an optimistic tone. “Consumer demand on our platform remains healthy as we enter the busiest period of the year,” he said.
“This trend continued in the fourth quarter, as we reached record highs for total trips and gross bookings in October, driven by the strength of both mobility and delivery.” Uber expects fourth-quarter adjusted core profit, a key measure of profitability, to be between $1.18 billion and $1.24 billion, above estimates of $1.15 billion, LSEG data showed.
Gross bookings, or the total dollar value earned from its services, are expected to be between $36.5 billion and $37.5 billion, compared to expectations of $36.31 billion.
“As driver supply remains strong in the (third) quarter, with a record 6.5 million active drivers, the company appears well positioned to generate strong results,” William Blair analysts said.
Optimism about travel demand during the holidays, a crucial period for industries from airlines to hotels, will also benefit Lyft, which will report earnings results on Wednesday.
In the third quarter, Uber’s revenue grew at the slowest pace since 2021 to $9.29 billion, missing estimates of $9.52 billion.
Adjusted core profit of $1.09 billion beat expectations of $1.02 billion, but net income per share was 2 cents lower than expected.
Shares were up more than 2% after volatile premarket trading.