- Free Now, Uber’s big ride-hailing competitor in Europe, says its overall European operations are profitable in contrast to US rivals.
- Free Now also won a two-year license to operate in London in August. Uber meanwhile is scrabbling to appeal a 2019 decision to scrap its London license.
- Free Now is owned by two European car giants, BMW and Daimler, who committed $1 billion in 2019 to the future of mobility in a joint venture.
- Despite losing as much as 95% of revenue in some cities because of COVID-19, UK general manager Mariusz Zabrocki is optimistic about Free Now’s growth prospects.
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Free Now, the European Uber rival jointly owned by Daimler and BMW, says its operations are profitable despite the pandemic.
The ride-hailing service has also won a two-year operating license from London’s transport regulator TfL to continue running its cab service in the UK capital.
Both achievements are a coup for Free Now, given its major US rivals Lyft and Uber remain unprofitable and saw a big dropoff in business during the pandemic.
And Uber is fighting to continue its service in London after TfL ruled the US ride-hail giant was not “fit and proper” to operate in London. Uber is due to appeal that decision in court, but still faces being kicked out of the city.
Free Now recently merged with its sister company, minicab app Kapten, to try and take on Uber in London and beyond with a platform that combines black cab and private car hire.
Free Now said its London license is the first private hire operating license awarded by TfL since the November ruling against Uber.
Free Now says it has hit profitability by staying focused on key European markets
Free Now is among several European hopefuls hoping to outgun Uber in local markets, and is owned by two of the world’s biggest car makers. BMW and Daimler committed in 2019 to spending more than $1 billion on Free Now and four other future-facing mobility companies.
Other ride-hailing services on the continent include Estonia’s Bolt and Mercedes Benz-backed ViaVan.
UK general manager Mariusz Zabrocki told Business Insider that Free Now is profitable in most markets it operates in, including the UK, and that its European operations are profitable overall.
He declined to give further financial detail, but a spokeswoman added: “FREE Now is profitable in most of the markets where it operates, including the UK, and also in its European operations as a whole.”
Zabrocki attributes this underlying profitability to the startup’s focus on launching in Europe’s biggest cities where it can be one of the two or three biggest players.
Free Now currently operates in 150 cities across 17 markets in Europe.
Nonetheless the pandemic has hammered the revenues of all ride-hail platforms. Uber reported a 29% hit to Q2 revenue compared with the same period last year, while Free Now says that revenue dropped between 60% and 95% depending on the city.
“April and May were extremely difficult, and that’s the period where we lost a lot of revenue across Europe, like every other company,” said Zabrocki. “But in June, in July, the whole of our European operations were profitable.”
In some markets like Greece, demand for Free Now’s services has rebounded and it is now growing year on year, while in others mobility is far from its pre-pandemic levels, said Zabrocki.
In London, around 41% of the city is moving compared to normal levels, according to the Citymapper mobility index.
Zabrocki is still optimistic about the outlook for Free Now: “Even if we’re not completely back to the same levels of mobility, even if we’re in about 70-80% of the mobility levels that we had before Corona, I expect our business to be actually up compared to the past.”
Free Now claims it’s different to Uber both in regulatory approach and in how it treats drivers
Free Now wants to set itself apart from Uber, which has faced years of scrutiny from legislators over its treatment of drivers and from regulators over the way it handles customer safety.
“I think we’re really different from Uber in that we have very sharp focus on safety. Also on the driver side, so not only protecting customers, but protecting drivers from from any safety incidents,” said Zabrocki, adding that Free Now has a zero tolerance approach to driver abuse.
Uber has become a lightning rod for the debate around how app-based businesses treat casual workers, or “gig economy” workers, such as its drivers.
The US firm is currently appealing a decision to reclassify those drivers as workers instead of contractors in the UK’s Supreme Court, a landmark decision that could guarantee them rights such as paid holiday and the national minimum wage. The company is also being sued by European drivers who want access to their personal data.
Another area of contention, particularly in London, is what ride-hailing services are doing to established taxi drivers. London’s black cab drivers have been vocal, successful anti-Uber lobbyists.
But Free Now has sidestepped this controversy by offering ride-hailing services for both private hire cab drivers and black cab drivers.
Zabrocki claims Free Now’s drivers have greater flexibility than their counterparts on Uber.
“Our approach is different, we give more flexibility to drivers,” said Zabrocki. “We give them more freedom to choose [which] rides they want to accept, and how many hours they want to work, whether they want to work for another operator.”
Still, the company’s drivers are subject to certain performance controls. Just as Uber drivers can be kicked off the platform if their rating falls too low — around 4.6, according to prior reporting from Business Insider — so too can Free Now drivers.
According to Zabrocki, this is to guarantee customer safety.
“Especially when someone has poor ratings because of safety-related incidents, we would definitely remove them from the platform,” said Zabrocki. “We would suspend the driver and also notify TfL … That’s not only common sense, but that’s the legal requirement.”
A future growth area for Free Now is electric scooters.
It already operates businesses across a number of European countries, such as Germany, Portugal, and Poland, and is looking to bid for a London license once the process kicks off.
In June, the government fast-tracked plans for e-scooters trials, making them legal on UK roads for the first time.
“The scooter business is at a much earlier stage, but it has really has great unit economics,” said Zabrocki. “So actually in many towns where we operate, we are profitable almost from day one.”