British judges ruled that Uber taxi drivers are employees costing the tech company $ 600 million in the first quarter. According to the nation’s highest court, a group of drivers who previously made trips in the UK via the app are still entitled to a minimum wage and vacation pay. In order to settle claims from drivers from the past, Uber thus expects a big loss.
The UK Supreme Court ruling in February fueled the uncertainty affecting major players in the platform’s economy. Companies like Uber take advantage of the self-employed who provide services through their sites, but suddenly it becomes more expensive if those people get employee rights.
Uber revealed the setback in its first-quarter results. In an explanation to analysts, CEO Dara Khosrowshahi has tried to assuage concerns about future costs due to legal setbacks as much as possible.
Hundreds of millions of dollars impacted reported sales and net income in the last quarter, but that’s mainly a paper loss. Uber handled 24 percent more requests in the first quarter compared to twelve months earlier. This is mainly due to the strong growth of the meal delivery division. Worldwide closures continue to weigh on the number of taxi rides required through Uber, which resulted in 38 per cent less than the previous year.
Uber’s entire revenue in the first quarter fell 11 percent from the previous year, to $ 2.9 billion. At less than $ 108 million, the net loss was well below the $ 2.9 billion deficit in the first three months of 2020. This is mainly due to the proceeds from the sale of Uber’s self-driving car division. Adjusted operating income, excluding these windfall gains, was negative $ 359 million.
Uber has never made a quarterly profit since its IPO in 2019. The summit stressed in a comment that the company is now confident it will be profitable before the end of the year.
You can follow these topics
