Uber sales growth slows further as IPO nears

Ride-hailing company aiming for a float that could value it at as much as $120B

As it steers toward a planned initial public offering later this year, Uber Technologies Inc. is hitting a bumpy patch on sales.

The ride-hailing company said Friday that fourth-quarter revenue rose 25% from a year earlier to $3.02 billion.

While rapid by the standards of most businesses, the pace was the slowest since Uber began disclosing detailed financial results two years ago, and showed growth continuing to skid downward from 38% in the third quarter and 70% in the first.

Uber narrowed its net loss in the latest period, to $865 million from $1.07 billion in the third quarter. For the full year, the San Francisco-based start- up reported a loss of about $3.3 billion, excluding a one-time gain from the sale of unprofitable businesses in Russia and Southeast Asia, compared with $4.5 billion in 2017.

Uber is aiming for an IPO that could value it at as much as $120 billion. Chief Executive Dara Khosrowshahi has worked to shore up the company’s balance sheet by selling unprofitable units and completing fundraising including investments from SoftBank Group Corp. and Toyota Motor Corp., and a large debt sale.

But the company is still struggling to control expenses, including incentive payments for drivers to keep them on the road longer and away from rivals such as Lyft Inc., which is also planning an IPO this year.

Uber has been investing in new businesses like its Eats food delivery service, which has been growing rapidly, as well as the Freight shipping unit and electric scooters and bicycles.

“Last year was our strongest yet, and Q4 set another record for engagement on our platform,” Nelson Chai, Uber’s chief financial officer, said in a statement. “We believe Uber Eats became the largest online food delivery business outside of China, based on gross bookings.”

That measure, which includes the full amounts Uber takes in before paying drivers, increased 31% to $14.2 billion, from $10.8 billion in 2017’s final quarter. That is also slower than the prior quarter last year, when gross bookings grew by 34%.

Uber will have to plead for patience from investors as it embarks on its roadshow later in the year. In bond documents for a roughly $2 billion offering last year, Uber said it didn’t expect to be profitable for at least three years.

As a result, Uber has been working to call attention to its Eats business in particular, which the company has said is on track to achieve $10 billion in overall sales this year, up from about $6 billion last year. Uber takes a commission of around 30% from many restaurants for the service, which connects them to customers through its app and delivers the food to their homes.

Uber still retains a comfortable cash cushion. It had $6.42 billion in cash and cash equiv- alents at quarter’s end, up from $4.39 billion a year earlier. But it also burned through $645 million in operations during the quarter, compared with $487 million in the third quarter. Lyft’s planned IPO, expected to come before Uber’s, is likely to be a bellwether for the industry. Unlike its rival, Lyft has no ancillary business outside of ride-hailing and has expanded only to Canada outside the U.S., its home market. It also is unprofitable.

Uber’s most recent private valuation was $76 billion compared with $15.1 billion for Lyft. Their IPOs are expected to be part of a big year for tech debuts, potentially including Palantir Technologies Inc., Airbnb Inc., Slack Technologies Inc. and Postmates Inc.