May 11, 2021

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Uber CEO ‘very confident’ the company will become profitable next year

Ubers acquisition of food delivery service Postmates will help push the company to profitability in 2021, CEO Dara Khosrowshahi told CNBC on Tuesday.

“We’re very confident we’re going to get to profitability next year and we have enough of a diversified portfolio to make that statement with quite a bit of confidence,” Khosrowshahi said in a “Squawk on the Street” interview.

The company announced Monday its plans to buy Postmates for $2.65 billion in an all-stock deal.

Uber had said in January that it would turn a profit on an EBITDA basis by the fourth quarter of 2020, then withdrew its guidance in May as the Covid-19 pandemic continued to upend daily life. In the first quarter, the company had a loss of $2.94 billion on revenue of $3.54 billion.

But its bet on the food delivery business could push it forward.  

The deal brings together Postmates, the fourth-largest U.S. food delivery service, with Uber Eats, which trails only DoorDash in market share, according to Second Measure and Edison Trends. Uber said it will also bolster its Uber Eats delivery unit, bringing in key markets like Los Angeles, Phoenix and Las Vegas, and 10 million active customers. 

“We want to get bigger in the category, and really scale is how you bring the category into profitability,” Khosrowshahi said.

While the company’s food delivery business is thriving in the pandemic, its core Rides business has slowed down significantly from last year. But that slowdown is moderating — Khosrowshahi said in a call with investors after the Postmates transaction that gross bookings in the Rides business were down 75% from last year in the second quarter, but are now down only 60%.

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