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Uber Eats and delivery business continue to rake in profits

Uber’s delivery business continues to deliver profits. The ride-hailing, food-delivering, freight-hauling superapp reported Q1 2022 earnings before the bell Wednesday, and in what was a strong quarter overall, Uber Eats and the company’s growing suite of delivery offerings again played a key role, posting all-time highs in both gross bookings and active merchants.

Shares of Uber (NYSE: UBER) were down about 11% in the early hours of trading on Wednesday due to losses on its investments in Grab, Aurora and Didi.

Despite being outdone the previous two quarters, Uber’s mobility segment brought in a shade more revenue than delivery for Q1 2022. But that’s no knock on delivery. The segment posted revenue of just over $2.5 billion, a 44% year-over-year increase.

Rather than delivery taking a back seat, the real story here is that mobility is making a comeback. The mobility business had struggled to gain ridership during the pandemic, but it bounced back in Q1. Mobility gross bookings reached a post-pandemic high.

Delivery, though, posted its own record numbers. Gross bookings grew to an all-time level in Q1, while active merchants on the platform surpassed 835,000 for the first time.

That’s in addition to modest year-over-year growth in monthly active platform customers, basket size and order frequency, each of which increased by less than 5%. Total active couriers are up 34% year-over-year, with 89% growth in U.S. couriers during that period.

The delivery business posted segment-adjusted earnings before interest, taxes, depreciation and amortization of $30 million, an improvement over Q4 2021’s figure of $25 million. It’s the second EBITDA-profitable quarter for delivery since Uber went public.

(Courtesy: Uber)

“We continue to benefit from consumers’ growing appetite for delivery services. Our delivery business posted yet another record quarter in Q1, growing 15% to nearly $14 billion in gross bookings,” said CEO Dara Khosrowshahi in prepared remarks for investors. 

“Additionally, we had yet another strong quarter in the U.S. and Canada, with organic Uber Eats gross bookings up 31% and total delivery up 23%.”

While Uber Eats has been something of a leaking bucket for profits since Uber went public in 2019, the company appears to have patched it up with new verticals. 

Read: Uber Delivery delivers first quarterly adjusted profit

Read: Uber CEO: ‘We’ve just never been in a better position’

In 2021, Uber Eats expanded beyond food delivery through a partnership with grocer Smart & Final, offering on-demand and scheduled grocery delivery out of more than 170 locations. That same year, it expanded into nonfood and grocery categories through partnerships with health and wellness retailers like Bed Bath & Beyond and Hims & Hers.

Uber Eats also partnered with nationwide grocer Albertsons (NYSE: ACI) this past July to deliver on-demand groceries to 400 U.S. cities out of more than 1,200 Albertsons banner stores. Just this week, the companies expanded that partnership to cover 2,000 stores across the country.

“New verticals (like grocery, convenience and alcohol) represent not only an opportunity to increase wallet share with our existing customers but also to increase engagement and loyalty with our platform,” said Khosrowshahi in prepared remarks. “New verticals users are more loyal and have 1.4x the monthly order frequency of those who only order from restaurants.”

Watch: The challenges and opportunities of 2-day grocery delivery

But Uber wanted to diversify its delivery business even further. In 2020, it launched Uber Direct, a white-label delivery service that allows businesses to leverage Uber’s network of delivery drivers to transport items to consumers or within their own supply chains.

Around the same time, the company launched Uber Connect, a local delivery service for Uber users. That service provides same-day parcel delivery and was recently expanded to include over 6,000 U.S. cities.

Uber and Khosrowshahi are bullish on delivery’s ability to sustain growth: “We expect delivery gross bookings to accelerate in the back half of the year as comparisons ease and as our grocery, convenience and alcohol offerings ramp further, and we expect to expand delivery EBITDA through the year,” the CEO told investors.

Of note, Uber Freight also posted its first-ever profitable quarter on an adjusted-EBITDA basis. It’s a significant milestone for the least developed of Uber’s three core business segments, and the service is set to grow further through the acquisition of Transplace. More on that later from FreightWaves’ John Kingston.

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