Updated version 2 - Uber profit forecast disappoints: Driver shortage and Middle East conflict impact business

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Reuters, November 4 - Uber UBER.N on Wednesday forecasted that fourth-quarter profit would fall short of Wall Street estimates due to driver shortages, higher fuel costs, and the Middle East conflict, which curbed ride-hailing growth from India and Brazil to Canada.

This slowdown forced Uber to invest more in recruiting and retaining drivers, even as the company continued funding for acquisitions and advancing its autonomous vehicle business.

CEO Dara Khosrowshahi told analysts the company is shifting incentive spending from passengers to drivers, which may mean higher fares. "This year, we are cutting back on passenger incentives and reallocating those funds to driver incentives," he said on a call with analysts.

The ride-hailing company's stock rose about 1.5% in early trading.

According to data compiled by London Stock Exchange Group (LSEG), Uber expects adjusted earnings per share for the fourth quarter to be between 95 and 99 cents, below the market's expectation of $1.06 per share.

The company said the Middle East conflict caused the third-quarter ride gross booking growth rate to drop by about 75 basis points, and expects a 100 basis point impact in the fourth quarter, as the escalation coincides with the busy holiday travel season.

At constant currency, ride gross bookings rose 17%, a slowdown from 20% in the second quarter.

"Rising fuel prices and tight driver supply constrained supply growth in several international markets," Khosrowshahi said.

Canadian operations have also been affected by tighter immigration flows, and Khosrowshahi said the market is "significantly undersupplied."

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The company expects gross bookings between $63.25 billion and $65.25 billion, while analysts had projected $64.42 billion.

Uber expects adjusted core profit between $3.13 billion and $3.23 billion, compared with analyst expectations of $3.19 billion.

Third quarter revenue was $14.77 billion, up 10% year-on-year, marking the slowest growth since the first quarter of 2021, but still above the $14.69 billion estimate.

Uber said it expects to have about 700 fully autonomous vehicles on its platform by year-end, rising to more than 2,000 by the end of 2027. The company plans to focus investment on a handful of autonomous driving partners.

The company also agreed to acquire meal platform ezCater. Besides investment in self-driving, Uber expects “little to no further M&A at least until 2027.”

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