Transcript: Your Uber profits have arrived

This is an audio transcript of the FT News Briefing podcast episode: ‘Your Uber profits have arrived’

Marc Filippino
Good morning from the Financial Times. Today is Thursday, February 8th, and this is your FT News Briefing.

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The UK’s Labour party is dropping one of its key campaign promises, and Uber has turned its fortunes around. Plus, negotiations to form a far-right government in the Netherlands are, well, they’re a mess.

Andy Bounds
Most political analysts have given up betting really on the outcome, to be honest, because even seasoned observers of Dutch politics are struggling to find a way through this.

Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.

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Labour leader Keir Starmer has a big announcement planned for today. His party’s dropping the commitment to spend £28bn a year on low-carbon infrastructure. Labour first introduced the price tag when UK interest rates were basically zero back in 2021, and they’re worried now about how much more expensive it’s become to borrow money. Starmer is expected to blame worsening public finances under the Conservative government, but Labour still wants to move forward with several of the proposals in the plan.

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Uber announced a major milestone yesterday when it reported earnings. It not only passed analyst expectations, the company also reported its first full year of operating profits. Here to talk to me about how that happened is Camilla Hodgson. She covers Uber for the FT. Hi, Camilla.

Camilla Hodgson
Hi.

Marc Filippino
All right, Camilla, do me a favour, just walk me through some of the highlights from yesterday’s earnings report for Uber.

Camilla Hodgson
Yeah. So it was a big moment for Uber, their first full year of operating profitability, something that shareholders have long been looking for. As part of that, they also hinted at the possibility of a share buyback. There were also some really strong metrics. It wasn’t just the operating profit number, but it was also margins widening, the number of monthly active users reaching an all-time high. So really a lot of metrics coming in ahead of analyst expectations. And all in all, a very strong quarter for the company.

Marc Filippino
Wow, OK. So good news basically across the board here for Uber. Why is this such a big deal for them?

Camilla Hodgson
It’s been a long time coming, I think, this first year of operating profitability. There’ve been questions for years about the sustainability of the Uber business model. It racked up tens of billions in losses over the last decade or so. There’s also a kind of a macro picture, which is in a tougher environment with higher interest rates, investors have really been pushing tech companies to demonstrate that they can be profitable, that they’re not just kind of endlessly lossmaking. So for the kind of macro and Uber-specific reasons, this was quite a big moment.

Marc Filippino
Just out of curiosity, how did they turn it around?

Camilla Hodgson
I think a number of different things. During the pandemic, that was obviously a tough time for Uber. Not a lot of people were taking cars anywhere. And during that time and in the aftermath, there was quite a lot of cost-cutting, lay-offs, drives really to kind of streamline the business, also to bolster the number of drivers that are available, which has improved margins and it’s helped eventually get to this profitable moment. Uber’s also trying to grow its advertising business, and that’s a high-margin business likely to help with longer-term profitability. So it’s really been a combination of things, and I guess the results have paid off.

Marc Filippino
So what do you think, Camilla, do you or analysts think that Uber can keep this up?

Camilla Hodgson
Yes, this is definitely something that analysts are watching and kind of wondering about. I spoke to one yesterday who was pointing out that the growth in the latest quarter, in the latest full financial year was really driven by an uptick in the number of users. And obviously, there is a cap eventually to how many new users you can get on to your platform. So then there are questions about, well, maybe Uber can expand into other businesses or grow, for example, its delivery business or its advertising business. I guess it’s an open question exactly which of the business segments can really drive growth and profits in the long term. Does it all fall to customer numbers, or is it more about making each customer more valuable?

Marc Filippino
Camilla Hodgson covers tech for the FT from San Francisco. Thanks, Camilla.

Camilla Hodgson
Thank you.

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Marc Filippino
Shares of UK chip designer Arm shot up like a rocket after it released its quarterly earnings report yesterday. They were up more than 25 per cent in after-hours trading at one point. Arm increased its full-year revenue guidance for 2024, and last quarter it blew past revenue expectations. It was only Arm’s second quarterly earnings report since it went public last September. The first left Wall Street pretty underwhelmed. So this is a big turnaround.

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Beijing has removed and replaced the powerful chair of its securities regulator. The change is in response to the brutal market meltdown that China has been experiencing lately. The benchmark CSI 300 index is down 44 per cent from its peak in 2021. Beijing this week tried to right the ship with a so-called national team of state-owned institutions buying up shares, and markets have rebounded a bit in response to the moves.

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The far-right winner of Dutch elections just can’t seem to form a government. Geert Wilders has been trying for more than two months to get a coalition together, and his prospects of doing so just got a whole lot worse. One of his key potential partners, the leader of the New Social Contract party, walked out this week. I’m joined now by the FT’s Andy Bounds to talk about this. Hey, Andy.

Andy Bounds
Hi.

Marc Filippino
So give us the state of play here. Where do negotiations stand in forming a government?

Andy Bounds
Yeah. So Wilders got 23 per cent of the vote in the elections back in November, which is quite high in the Netherlands. There’s more than 20 parties, and there’s a full proportional representation system. So it means that you obviously have to form coalitions. And he’s been working with four other, not as far-right as him, but centre-right parties to try to do that. And one of them this week decided that it didn’t want to continue. And therefore, the talks are in some trouble.

Marc Filippino
And what’s the main sticking point here, Andy?

Andy Bounds
Well, the irony is it’s actually about money rather than some of the wilder plans that Wilders had to this manifesto. New Social Contract said that they’d taken a look at the books of the government, and the New Social Contract party decided that the budget deficit was just too big. And they’re worried that Wilders is making promises he can’t keep with some of his spending plans.

Marc Filippino
All right, so it’s about money. What else is jamming up the process, though?

Andy Bounds
Dutch coalition talks often take a while, but there are serious questions about his commitment to upholding the Dutch constitution. He’s a veteran anti-Islam campaigner who has long wanted to ban mosques. And there’s often talks about sending, you know, Moroccan immigrants home. Now he’s dialled down that rhetoric substantially in the election campaign and since. But obviously, party leaders are still nervous that he might revive some of that kind of tactic and, you know, they don’t want to deal with somebody who’s in danger of breaching the constitution.

Marc Filippino
Andy, can you just walk us through what Wilders can do at this point now that the centre-right party New Social Contract has walked out?

Andy Bounds
Yes, so the process is overseen by a former member of parliament, former minister, and he has to decide what happens next. And he will do that next week. He could keep the talks going. He could turn to the left-wing party, which came second in the elections, but they would find it difficult to find enough votes to get a government together. Or at some point, there could be new elections, but new elections might bring us back to the same place of stalemate because the polls show that Wilders would do even better this time than he did last time. So this is an acute dilemma, and most political analysts have given up betting really on the outcome, to be honest, because even seasoned observers of Dutch politics are struggling to find a way through this.

Marc Filippino
Andy Bounds is an EU correspondent for the FT. Thanks for your time, Andy.

Andy Bounds
Thanks very much.

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Marc Filippino
And finally, Israel’s Prime Minister Benjamin Netanyahu forcefully shut down Hamas’s conditions for a hostage deal last night. The militant group had demanded a couple of things, including a ceasefire that would last four and a half months and the release of at least 1,500 Palestinian prisoners. Hamas also wanted all Israeli troops to withdraw from Gaza, and in exchange, Hamas would return all of the roughly 130 remaining hostages. Netanyahu called the terms, quote, delusional, and instead promised that Israel would continue its military offensive in Gaza until it won, quote, total victory.

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You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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