A $3.1 billion Grubhub write-down and some asset-ditching
I love a good day-of newsletter rewrite! (This is sarcasm.)
Uber reported quarterly earnings on Tuesday morning, and the company is free cash flow positive for the first time ever. That means it still has money in the bank after it pays for its operations. Uber CEO Dara Khosrowshahi promised this metric months ago as he warned employees the company would need to pull back on some spending to weather less-than-great economic conditions. Now, it seems like Uber’s going to cut back in other ways; Reuters reports that Uber is planning to sell its 7.8 percent stake in Zomato, a large delivery service in India, for $373 million.
Elsewhere, Just Eat Takeaway, which currently owns Grubhub, is trying to ditch an asset of its own. The company is looking to sell its 33 percent stake in iFood, a Brazilian online ordering and delivery company. JET, which operates in 22 countries, said Wednesday that orders are down in the first half of the year as compared to the same period last year. Still, Jitse Groen, the company’s CEO, says that the company’s “path to profitability is accelerating.” (JET is also reportedly trying to ditch Grubhub.)
“After a period of exceptional growth, Just Eat Takeaway.com is now two times larger than it was pre-pandemic, CEO Jitse Groen said in a statement, noting the growth required “significant investment.”
Indeed it did: the company paid $7.3 billion for Grubhub in an all-stock deal that closed a year ago. Today, that company is officially worth far less; JET had to take a $3.1 billion write-down on Grubhub.
Zooming out, it seems the companies are refocusing efforts on what works — a.k.a. that responsible delivery growth I mentioned in May. Uber is proving this focus can work.
In April, May, and June Uber recorded record revenue of $8.1 billion, more than doubling from the same period a year ago, but it still lost a couple billion dollars overall. Uber’s losses came from its stake in other companies: Aurora (self-driving technology); Grab (a Singapore-based Uber-like superapp); and the aforementioned Zomato — so it’s understandable they’d want out.
Khosrowshahi also underscored Uber’s growth strategy on the call. He frequently touts Uber’s ability to cross-sell customers; that is, they can turn a rides customer into a delivery customer, and vice-versa. Now Uber’s working to put the same kind of energy behind its subscription loyalty program, Uber One. It currently has 10 million members in seven markets; 32 percent of delivery gross bookings (that’s the metric Uber uses to describe the value of all orders and fees generated by its platform) come from members.
“Once we cross-sell customers, we move them into membership as well,” Khosrowshahi told investors and analysts on Tuesday’s call.
The enabler and the disruptor, ghost kitchens edition
Remember last week when I said I sometimes have trouble determining the best way to cover success in restaurant technology because the way tech companies measure success feels very different from the way restaurants measure success? (If you don’t remember, now you know. I think about this constantly.)
Here is, I think, an appropriate way to think about the future: enabling vs. disrupting.
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