US taxi app company transforms $1.8 billion deficit into $1.1 billion profit after years of investing billions from investors to expand.
In a significant milestone, Uber has announced its inaugural annual operating profit since becoming a limited company. This marks a pivotal moment for the business, which undertook an aggressive and frequently controversial global expansion, fueled by billions of dollars from investors. The US-based taxi app firm disclosed earnings of $1.1 billion in 2023, a stark turnaround from the $1.8 billion loss reported the previous year.
The achievement has sparked investor speculation regarding potential share buybacks or dividend payouts by Uber. Prashanth Mahendra-Rajah, Uber’s CFO, announced that the company would unveil its “capital allocation plans” to investors in the upcoming week.
Following an initial dip, Uber’s share price saw a 1% increase on Wednesday. Throughout 2024, its stock has risen by more than 20% and has doubled in value over the past year, reaching a valuation of nearly $150 billion.
During the final quarter of 2023, customers booked a total of 2.6 billion trips, averaging approximately 28 million trips per day.
Dara Khosrowshahi, Uber’s CEO, expressed, “2023 marked a turning point for Uber, demonstrating our ability to sustain robust and profitable growth on a large scale. Our user base is now larger and more engaged than ever before, with our platform facilitating an average of nearly 26 million daily trips last year.”
Uber was established in 2009 by entrepreneurs Garrett Camp and Travis Kalanick. Kalanick assumed the role of CEO in 2010 and spearheaded an expansion that saw the rapid proliferation of the app across the United States, followed by Europe, and numerous other cities worldwide.
Uber’s growth was facilitated by its adoption of the gig economy model, wherein its drivers in numerous countries were classified as independent contractors, lacking entitlements such as sick pay or paid vacation.
Kalanick’s tenure as CEO was marked by a series of scandals and conflicts with regulators. In 2022, a leak reported by the Guardian exposed Uber’s violations of laws, manipulation of law enforcement, and clandestine lobbying efforts as it expanded its services.
Kalanick was succeeded in 2017 by Khosrowshahi, a former CEO of the travel agency Expedia, who has endeavored to soften the company’s image and prioritize compliance with regulatory standards.
Dan Ives, an analyst at the investment bank Wedbush, commended Khosrowshahi for leading “one of the most remarkable turnarounds in the tech industry,” emphasizing that Uber shows no signs of deceleration.
Since its debut on the New York Stock Exchange in May 2019, Uber had consistently incurred significant operating losses. Losses escalated from $3 billion in 2018 to $8.6 billion in 2019, before declining to $4.9 billion in 2020, $3.8 billion in 2021, and finally $1.8 billion in 2022.
The company’s profitability in 2023 was partially attributed to increasing demand. Gross bookings, representing the total payments made by Uber passengers and delivery customers, surged by 22% to $37.6 billion in the final quarter of 2023 compared to the previous year. Uber’s revenue from these transactions amounted to $9.9 billion.
