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Competition eats into UberEats commission, 4% decrease on-year

Uber on Thursday reported that its revenue rose 20% in the quarter ended March 31, 2019, to $3.1 billion, while its losses swelled to $1 billion.

, ET Bureau|
Jun 01, 2019, 10.47 AM IST
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The pressure on the food delivery business negatively affected Uber’s overall margins, which includes its mainstay ride-hailing business.
BENGALURU: In its first quarterly earnings report as a public company, Uber reported that the commission earned by UberEats dropped 4% on a year-on-year basis, half of which was attributed to increased investments in its India food ordering unit where it competes with bigger rivals Swiggy and Zomato.

Uber's food-ordering business globally too took a knock as margins for the ride-hailing giant dropped because of higher discounts to customers along with incentives to drivers and restaurants. “In India, increased incentives to consumers, drivers and restaurants drove nearly half of the decline in UberEats’ take rate to 8% from 12% a year ago,” Uber’s chief financial officer, Nelson Chai, told analysts on a call post the announcement of the company’s results.

Uber on Thursday reported that its revenue rose 20% in the quarter ended March 31, 2019, to $3.1 billion, while its losses swelled to $1 billion. In Asia, Uber’s ride hailing revenues grew 6% to $267 million.

UberEats, as a standalone business, raked in $536 million in revenue during the same period, which is an increase of 89% from the year-ago period.

The pressure on the food delivery business negatively affected Uber’s overall margins, which includes its mainstay ride-hailing business. Margins dropped 4% year-on-year to 18% of the overall gross booking value, the company said.

Uber’s food ordering business earns lower margins than the core ride-hailing business.

ET had reported that Uber had tried to sell its Eats business to rival Swiggy in India ahead of its IPO, but the merger deal fell through at the last moment. “It’s (Uber Eats in India) growing very, very quickly. There are two competitors that are very aggressive. We are doing well in holding our own, but it is a market in which we are funding the eater, the courier as well as the restaurant,” Chai explained.

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