Uber
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. “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 also told investors during the call that it was changing how it calculates Uber Pool’s contribution to revenue in the second quarter, which had the effect of increasing revenue.
Uber’s losses and revenue have generally grown in lockstep as the company’s global ambitions have expanded. Uber has lost money quarter after quar- ter. 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. 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.
“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 Joe Grundfest, profes- sor of law and business at Stanford. “The interesting challenge is for them to turn the corner to become profitable, cash-flow-positive entities.”
The second quarter of 2016, which ended in June, could represent a nadir for Uber. In July, it cut a deal with its largest global competitor, Chinese ride-hailing behemoth Didi Chuxing, washing its hands of its 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.
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 Friday’s call that it’s willing to spend to maintain its market share in the U.S.
Uber has about $8 billion in the bank and will soon receive $1 billion in cash from Didi, according to a person familiar with the matter. Uber also has access to a $2 billion credit line and a $1.2 billion loan.
“I think what Uber is trying to do is, ‘Hey, look, we’re going to take the losses up front in order to get to disproportionate scale,’ ” said Robert Siegel, lecturer in management at Stanford’s business school. “The question is when they can get to profitability.”
“You won’t find too many technology companies that could lose this much money, this quickly.” — Aswath Damodaran, business professor, New York University
The ride-hailing 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 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
$5 billion Uber bookings for second quarter of this year
$3.8 billion Bookings from first quarter of this year