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Uber, Lyft Differences Boil Down to Transportation vs End-to-End Mobility

Uber and Lyft stickers on car

Uber and Lyft’s most recent earnings reports spotlight a widening divergence in approach in business models.

At first glance, there’s a core focus for both firms:

That would be matching the supply and demand for movement, of course, for drivers and customers to link up across platforms. But beyond that broad concept, Uber and Lyft have taken different roads. Lyft is, arguably, in the transportation business, while Uber is increasingly endeavoring to broaden logistics and mobility, crafting end-to-end connections across a variety of use cases.

Continued Demand for Ride-Hailing

Gross bookings in the ride-hailing businesses have shown resilience for both Uber and Lyft.

Lyft said in its latest results that gross bookings were up 17% year on year. And the number of active riders surged 10% in the fourth quarter. The company is forecasting rides growth in the mid-teen percentage points, as measured year over year, for fiscal year 2024. The company also has an advertising business, where the in-app advertising and car-rooftop advertising offers up an additional revenue stream.

CEO David Risher said on the conference call with analysts that the company is focusing on what it calls “ridehare perfection,” and offered up examples of the company’s efforts to launch new ride-sharing products and services, such as Women+Connect (which matches women and non-binary riders and drivers) and the company’s “on time pickup promise.” That feature offers riders cash in the event that a driver is more than 10 minutes late to pick up a customer for a trip to the airport. Revenues, overall, were up a bit more 4% in the most recent quarter to $1.2 billion.

Uber, for its part, said that in the fourth quarter, gross bookings for mobility trips jumped by 29%. Elsewhere, the company noted that as its overall revenues rose 13% (in constant currency), gross bookings in its delivery business were up 19%.

In terms of the cross-selling and extensions of the platform model, for Uber the trend has been to grow its membership roster tied to the subscriptions that help users save on mobility trips and Uber Eats.   Advertising, the company noted in its presentation materials, now has a $900 million annualized run rate.

End-to-End Mobility and Membership

CEO Dara Khosrowshahi said that a significant number of Uber One members — now at 19 million members overall — have been moving “to annual memberships that reduces … turnover and increases the retention of the members.” He also said on the call that “cross-selling across the platform … continues to increase.” A customer who used the platform for mobility and orders Uber Eats will spend three times more than non-members, according to commentary on the call. As much as 45% of delivery gross bookings come from members, management has noted, and order frequency has been on an upswing as well.

As Khosrowshahi said on the call, “members buy more, they stay longer and, just mathematically, members will account for higher percentage of gross bookings … this means a higher percentage of customers are going to stick around for longer and transact more frequently.”