The coronavirus pandemic has turned Uber upside down.
As many consumers continued to stay home and have food delivered in the second quarter, the ride-sharing giant’s delivery business surged while its ride-hailing side plummeted, a reversal of the company’s two main services.
Gross delivery bookings rose 113% year over year to nearly $7 billion for the quarter ended June 30. Ride bookings, meanwhile, fell by nearly 75% to about $3 billion.
Delivery revenue was up 110% to $1.2 billion for the quarter, while ride-hailing revenue fell 65% to $790 million.
“We’ve essentially built a second Uber in under three years,” said CEO Dara Khosrowshahi on an earnings call with shareholders Thursday.
He acknowledged that COVID-19 had something to do with that. But he said the trend signals a “more profound shift in consumer behavior that will last well beyond the pandemic” as consumers get used to having food brought to their homes in 30 minutes.
Delivery in general has boomed during the pandemic, with lots of restaurants adding the service and sales, users and order sizes increasing. Whether that demand will stick after the virus goes away remains to be seen.
Uber Eats saw new users rise by 50%, and order sizes were up in the double digits, said CFO Nelson Chai. Those trends continued into July, he said.
Despite all that, Uber Eats still lost money—$232 million for the quarter. Executives said delivery profitability is “only a question of when.”
“When we look from a structural basis or the margins of the business, you fast forward a couple of years now, we think we will be profitable in the vast majority of the countries in which we operate,” Khosrowshahi said.
Another factor in Uber Eats’ profitability picture is the company’s acquisition of delivery company Postmates in July.
On the call Thursday, Uber reiterated plans to use Postmates to beef up its market share in LA and the Southwest. Postmates will also help Uber expand further into delivering groceries, home goods and other products, executives said.
“We’re really thinking about overall local commerce, and we see lots of competition,” Khosrowshahi said. “But also, we see a very large category, a historic kind of demand wave behind us.”
Postmates brought in $4 billion in annualized gross bookings in the quarter, he said.
By some measures, the acquisition will make Uber Eats the second-largest food delivery provider in the U.S. In June, Uber Eats and Postmates made up a combined 32% of delivery sales behind DoorDash at 45%, according to consumer analytics firm Second Measure.