Uber Technologies on Wednesday forecast first quarter profit below market expectations and posted weaker than expected fourth quarter earnings, as higher taxes and increased investment in lower cost ride options weighed on margins. The outlook sent the company’s shares down more than 8 percent in premarket trading.
The ride hailing company said it expects its adjusted effective tax rate to range between 22 percent and 25 percent this year, reflecting its operations across more than 70 countries. Uber explained that its global footprint creates a tax profile similar to that of large United States multinationals with extensive international operations.
Despite the pressure on profits, Uber reported strong growth in usage, with trips rising 22 percent in the fourth quarter. The increase was driven largely by consumers choosing more affordable offerings such as shared rides and other low cost mobility products. The company has previously said it is intentionally slowing margin expansion in order to prioritise growth and demonstrate the long term strength of its business model.
Uber expects adjusted earnings per share of between 65 cents and 72 cents for the first quarter, below analyst expectations of 76 cents. For the fourth quarter, the company earned 71 cents per share, missing estimates of 79 cents. Gross bookings for the first quarter are projected to fall between 52 billion dollars and 53.5 billion dollars, above market expectations, signalling continued demand across its platform.
Chief executive Dara Khosrowshahi said improving pricing conditions and lower insurance costs should support faster growth and margin expansion in the United States this year. Uber is also positioning itself for the future of autonomous mobility through partnerships with companies such as Waymo and Lucid, as it prepares to integrate robotaxis alongside human drivers.
Both the mobility and delivery segments recorded growth in the fourth quarter, with delivery bookings rising faster, reflecting strong demand for convenience services. The company also announced a change in leadership, with finance chief Prashanth Mahendra Rajah set to step down and Balaji Krishnamurthy, a former Goldman Sachs executive, named as his successor. Uber added that changes in accounting for parts of its United Kingdom business will reduce reported mobility margins in the short term without affecting underlying profitability.