Uber quarterly loss surges to $1.1 bn
Uber’s sales are dramatically slowing even as the ride-hailing company is spending more to fuel global growth, particularly in its food delivery business. Revenue growth of 38% in the third quarter was almost half of what the growth rate was six months earlier, when the company was negotiating a $9.3 billion investment led by SoftBank Group Corp.
That’s a troubling sign for a serially unprofitable business that hopes to get valued like a technology company in a planned initial public offering (IPO) next year. Uber Technologies Inc. lost $1.07 billion in the quarter ended September 30, an improvement over a year ago, but the loss widened 20% from the second quarter.
Highly valued companies typically grow quickly or generate big profits—and great ones do both. In the fourth quarter of 2005, Amazon.com Inc. had about the same revenue as Uber’s today—just under $3 billion, not adjusted for inflation. Yet, Amazon earned $199 million in profit and was worth about a fourth of Uber’s $76 billion valuation.
Uber released a limited set of financial information on Wednesday, a move the privately held company voluntarily does each quarter. The San Francisco-based company also offered a glimpse into its food delivery business for the first time. A spokesman said Uber Eats generated $2.1 billion in gross bookings. That represents 17% of Uber’s $12.7 billion in gross bookings last quarter.
The emergence of Uber Eats as a promising new business has been good news for a company that’s hoping to argue in its IPO pitch that it can build a suite of similar offerings. Uber is now eyeing electric-scooter rentals, logistics and autonomous cars.
But just as there is lingering uncertainty about the profitability of Uber’s core ride-hailing business, whether the San Francisco-based company can build a profitable food-delivery service is unproven. While food is boosting Uber’s gross revenue, it’s shrinking the company’s margins. Uber didn’t provide exact figures on the impact.
On stage at the Wall Street Journal technology conference on Tuesday, chief executive officer Dara Khosrowshahi defended the company’s ability to achieve profitability. He argued that some ride-hailing markets generate profit for Uber after accounting for local operations teams, drivers and other regional expenses. In the US, however, the business is not profitable even by this lower standard. “In the US, which is our largest market, we’re in a big battle” with Lyft Inc., he said.
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