The New Uber, Google Founders’ Letter: The Information’s Tech Briefing

In a sign of the times, Uber said Thursday its restaurant-food delivery revenue surpassed ride-hailing for the first time. Uber Eats revenue rose 103%, to $1.2 billion in the June quarter, and its profit margin—at negative 19%—was the unit’s best in many quarters. Ride-hailing generated just $790 million, down 67% due to pandemic shutdowns.

Uber’s management, starting with its ousted ex-CEO Travis Kalanick, had championed Uber Eats as a business that could both bring in new revenues and piggyback off its transportation network. CEO Dara Khosrowshahi, who arrived three years ago, consistently invested in Uber Eats, even after its financial picture became clouded ahead of the company’s IPO last year. That decision turned out to be wildly fortuitous, notwithstanding challenges from strong U.S.  rivals such as DoorDash.

In contrast, Khosrowshahi’s outlook on ride-hailing was bleak. On a call with investors, he said that if customers move away from big cities as work-from-home trends continue, Uber will operate in more small cities. That’s not a recipe for success in ride-hailing, which needs high density and volume to make real money. —Amir Efrati