The Denver Post

Uber loses $1.3 billion in ’16

The firm’s value is now estimated at $69 billion.

- By Eric Newcomer

The ride-hailing giant Uber 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 Gautam Gupta, its head of finance.

This time Gupta told investors that Uber’s losses mounted in the second quarter. Even in the U.S., 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 amortizati­on, 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 U.S., those people said.

That means Uber’s losses in the first half of 2016 totaled 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 skepticall­y 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.”

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 amortizati­on. Uber, which is seven years old, has lost at least $4 billion in its history.

It’s hard to find much of a precedent for Uber’s losses. Webvan and Kozmo.comtwo 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.

“It’s hardly rare for companies to lose large sums of money as they try to build significan­t markets and battle for market share,” said Stanford professor Joe Grundfest. “The interestin­g challenge is for them to turn the corner to become profitable, cash-flow-positive entities.”

Uber’s backers range from venture capital firms like Benchmark Capital to the investment bank Goldman Sachs. Altogether, Uber has raised more than $16 billion in cash and debt. Its latest valuation is a whopping $69 billion.

Uber has been engaged in a fierce price war with Lyft this year, and that has also contribute­d to the enormous losses. Uber told investors on the call that it’s willing to spend to maintain its market share in the U.S. The company told investors that it believes Uber has between 84 percent and 87 percent of the U.S. market.

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