Uber Revenue Doubles, Sending Shares Surging

Chief Executive

Dara Khosrowshahi

said decades-high inflation was showing little impact on customers using the company’s services. “The marketplace looks strong,” he said on an earnings call.

There are indications that factors such as rising grocery costs are causing individuals to become Uber drivers to offset the pressure on their wallets, he added. “Over 70% of drivers say inflation has played a part in their decision to come on to the platform,” he said.

The company also said it generated free cash flow of $382 million in the quarter. It was the first time Uber generated free cash flow from its underlying operations and not on the basis of a one-time adjustment—a goal it had promised investors.

Revenue was partly boosted by high ride prices, triggered by a yearlong driver shortage in the U.S. and the acquisition of Transplace, a logistics services provider. The company also changed how it accounts for its rides operations in the U.K., giving a boost to revenue from the prior year.

Tuesday’s results signaled that the company’s efforts to trim its losses while continuing to grow were working, though it still posted a $2.6 billion net loss, driven in large part by accounting adjustments to reflect the falling value of its stakes in Chinese ride-hailing company

Didi Global Inc.,

Southeast Asia’s

Grab Holdings Inc.

and

Aurora Innovation Inc.

Shares of Uber advanced 19% on Tuesday.

Uber said that the pace of improvement in the underlying business might moderate. Activity on the platform so far this quarter suggests bookings for its delivery business in the current period will be roughly flat from the second quarter, it said. Bookings include Uber’s revenue and the money that goes to others, such as drivers or restaurants.

The company forecast the total value of bookings on the platform to be between $29 billion and $30 billion in the September quarter, in line with Wall Street’s forecast of $30 billion and broadly on par with the $29.1 billion in the June quarter.

One of its most closely watched financial metrics, adjusted earnings before interest, taxes, depreciation and amortization, should come in between $440 million and $470 million in the current quarter, the company said. That is a smaller improvement than in the second quarter, but ahead of the $383 million Wall Street has been projecting. This metric strips out some expenses such as asset write-downs and stock-based compensation that executives consider to be outside a company’s core operations.

Uber’s ride-hailing bookings drove much of the top-line growth in the most recent quarter, recording a 55% jump, and underpinned the company’s stronger-than-expected operating income.

The company’s delivery unit, Uber Eats, is expanding on top of record-breaking business during the pandemic, but growth has cooled in recent quarters. Uber Eats’ bookings grew 7% in the latest quarter, missing analysts’ projections, weighed down by a deceleration overseas. The unit’s bookings almost doubled in the same quarter a year ago.

Still, Uber is making more money from its deliveries than before because of higher volume—driven by its expansion into household essentials and groceries—and lower delivery costs by combining those items with food, the company said.

For a year, Uber and its ride-share rival

Lyft Inc.

have contended with another challenge: not enough drivers to meet the growing demand for their rides. The labor shortage pushed up prices for rides, and fares have continued to remain elevated.

With more people becoming Uber drivers amid inflationary pressures, the company ended the second quarter with a record number of drivers and food-delivery couriers, Mr. Khosrowshahi added.

Uber said that in July, wait times for riders and “surge trips,” which kick into effect when drivers are in short supply, were nearly at their lowest levels in a year.

Neither Uber nor Lyft have said how many more ride-share drivers they need to meet demand.

Last week, Uber rolled out new features to sweeten the deal for ride-share drivers. One feature allows drivers to see earnings upfront, while another feature allows them to choose from a list of potential trips as opposed to sticking with the ride Uber matches them to.

Mr. Khosrowshahi said back-to-school demand should be strong, adding to the need for more drivers. “We are going to continue being in the marketplace to make sure that drivers come on to the platform,” he said, signaling optimism also for many people wanting to grab rides in the last three months of the year.

High gas prices also have weighed on drivers. On Tuesday, Uber said 13.3 million trips took place in electric vehicles last quarter, quadrupling from the same period a year ago, though still a sliver of the 1.87 billion trips over the quarter.

Write to Preetika Rana at preetika.rana@wsj.com and Meghan Bobrowsky at Meghan.Bobrowsky@wsj.com