“For every dollar of revenue growth, especially from Q4 to Q4, we expect to drop 50 cents to 55 cents to the bottom line,” Khosrowshahi said on “Squawk Box.” “We think that’s absolutely doable to get to profitability by Q4, but at the same time make the kinds of investment we want to make to keep a high growth rate for many years to come.”
Uber reported better-than-expected fourth-quarter financials after-the-bell Thursday, which sent shares about 7% higher in the premarket. The ride-hailing and delivery platform announced a loss that was narrower than expected and moved its EBITDA profitability target to Q4 2020, rather than 2021. The company’s revenue was slightly above Wall Street forecasts.
Khosrowshahi pointed toward the company’s top segment, Rides. That portion, including ride-sharing services and fees from drivers, delivered $13.51 billion in gross bookings, up 18% and below the $13.60 billion estimate among analysts polled by FactSet.
“For rides in 2019, for every dollar of revenue growth … they dropped about 80 cents to the bottom line,” he said. “For 2020, we can do the same thing, not just for the rides business but the whole business.”
The company is still paying out its so-called “driver referrals and excess driver incentives” to drivers in its food and ridesharing business.
Rides driver referrals and excess driver incentives cost Uber $123 million in 2019, with $20 million of that in Q4. Eats referrals and incentives for drivers cost Uber $1.13 billion in 2019, and $319 million in Q4 alone.
Uber’s food-delivery segment, Uber Eats, has struggled to become profitable, though Khosrowshahi pointed out that it is a fast-growing component.
“We need to grow and consolidate,” he said of the Eats segment.
The company last month sold its food-delivery business in India to Zomato, a competitor. Uber also closed its Eats segment in South Korea last year.