Uber forecasts profit below estimates on cheaper rides and higher taxes

Feb 4 (Reuters) – Uber Technologies forecast first-quarter profit below expectations and fourth-quarter estimates on Wednesday, weighed down by higher taxes and an increase in more affordable ride options aimed to boost bookings.

Shares fell more than 8% in premarket trading after the ride-hailing company said it expects adjusted effective tax rate to be between 22% and 25% this year.

“Our ETR reflects our business with operations across 70+ countries, which results in a tax profile comparable to large US multinationals with significant global operating presence,” Uber said.

Trips rose 22% in the fourth quarter, as more consumers opted for Uber’s affordable offers such as shared rides and other lower-cost mobility products.

The ride-hailing company had said in November it was deliberately moderating the pace of margin growth after demonstrating over the past several years that its business model can generate profits at scale. 

Uber had said investments in affordability and low-cost product offerings were partly responsible for accelerating mobility growth, even as they weighed on near-term margin gains.

The company expects first-quarter adjusted earnings per share of 65 cents to 72 cents, compared with expectations of 76 cents, while for the fourth quarter it earned 71 cents and missed estimates of 79 cents per share.

Uber had last year said it will replace quarterly adjusted core profit guidance with adjusted profit per share to give investors a clearer view of recurring operating performance.

Gross bookings is expected to be between $52.0 billion and $53.5 billion for the first quarter, above estimates of $51.16 billion, according to data compiled by LSEG.

Uber CEO Dara Khosrowshahi said improving pricing conditions and lower insurance costs should support faster U.S. growth and margin expansion this year.

CFO CHANGE

The company said Prashanth Mahendra-Rajah, finance chief since November 2023, will step down and Balaji Krishnamurthy, a former Goldman Sachs executive who joined in 2019, will take the role.

Uber also said a change in how it accounts for parts of its UK business starting in January will lower reported mobility revenue margin by about 350 basis points in the first quarter and for 2026, without affecting underlying profitability.

The company is positioning itself to be a key facilitator as autonomous ride services begin to scale, partnering with companies including Alphabet’s Waymo and Lucid to integrate robotaxis alongside human drivers.

Mobility and delivery segments grew in the fourth quarter, with delivery gross bookings rising faster than mobility, in a sign of strong demand in segments such as convenience services, which have lower margins than ride-hailing.

(Reporting by Akash Sriram in Bengaluru; Editing by Arun Koyyur)