Uber losses mount to at least $1.2b in first half of 2016

SAN FRANCISCO: The ridehailing giant Uber Technologies is not a public company, but every three months, dozens of shareholders get on a conference call to hear the latest details on its business performance from its head of finance, Gautam Gupta.

On Friday, Gupta told investors that Uber’s losses mounted in the second quarter. Even in the US, where Uber had turned a profit during its first quarter, the company was once again losing money.

In the first quarter of this year, Uber lost about $520 million before interest, taxes, depreciation and amortisation, according to people familiar with the matter. In the second quarter the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the US, those people said. That means Uber’s losses in the first half of 2016 totalled at least $1.27 billion.

Subsidies for Uber’s drivers are responsible for the majority of the company’s losses globally, Gupta told investors, according to people familiar with the matter. An Uber spokesman declined to comment.

“You won’t find too many technology companies that could lose this much money, this quickly,” said Aswath Damodaran, a business professor at New York University who has written sceptically of Uber’s astronomical valuation on his blog. “For a private business to raise as much capital as Uber has been able to is unprecedented.”

Bookings grew tremendously from the first quarter of this year to the second, from above $3.8 billion to more than $5 billion. Net revenue, under generally accepted accounting principles, grew about 18 percent, from about $960 million in the first quarter to about $1.1 billion in the second.

Uber’s losses and revenue have generally grown in lockstep as the company’s global ambitions have expanded. Uber has lost money quarter after quarter. In 2015, Uber lost at least $2 billion before interest, taxes, depreciation and amortisation. Uber, which is seven years old, has lost at least $4 billion in the history of the company.

It’s hard to find much of a prec- edent for Uber’s losses. Webvan and Kozmo.com-two now-defunct phantoms of the original dot-com boom-lost just over $1 billion combined in their short lifetimes. Amazon.com is famous for losing money while increasing its market value, but its biggest loss ever totaled $1.4 billion in 2000. Uber exceeded that number in 2015 and is on pace to do it again this year.

The second quarter of 2016, which ended in June, could represent a nadir for Uber.

The company’s losses will likely fall. In July, it cut a deal with its largest global competitor, Chinese ride-hailing behemoth Didi Chuxing, washing its hands of its massive losses in that country.

Didi gave Uber a 17.5 percent stake in its business and a $1 billion investment in exchange for Uber’s retreat. Uber lost at least $2 billion in two years in China, people familiar with the matter told Bloomberg in July.

Uber won’t see any losses from China on its balance sheet after August, the company said on Friday’s investor call.