Uber loses out on profit as chief focuses on global growth
INTERNATIONAL - Uber Technologies chief executive Dara Khosrowshahi is putting growth above profit as gains are proving harder to come by since the ride-hailing service has reached a global scale.
Nearly a year into Khosrowshahi’s tenure, Uber reported on Wednesday a second-quarter loss of $891 million (R12.9 billion). While it is a 16 percent improvement from a year earlier, the loss follows a rare profit posted in the first quarter, thanks largely to the sale of overseas assets.
Even after increased spending last quarter, revenue growth is slowing. Sales rose 63 percent to $2.8bn in the second quarter compared with the same period last year. The rate in the first quarter was 70 percent.
Uber is privately held but chooses to release some quarterly financial details to its large body of investors and to the public. The company is targeting an initial public offering in the second half of next year, but it still does not have a chief financial officer after years of searching.
Uber’s Revenue Climbs
But growth is slowing, down 7 percentage points, as the company burns cash.
Khosrowshahi is pouring large, undisclosed sums of money into food delivery, logistics, and autonomous-car technology. The San Francisco-based company has said the food delivery business, Uber Eats, represents more than 10 percent of its gross bookings.
Growth in that segment may be masking a slowdown in Uber’s main business. Earlier Wednesday, technology news site The Information reported that Uber is spending $125m to $200m a quarter on self-driving cars, and the company has fielded calls from investors to sell the unit.
While Uber sees the potential for geographic expansion, the ride-hailing service is, for the most part, already global.
The company has retreated from markets like China, Russia, and Southeast Asia by selling them to regional competitors. While two of those sales pushed Uber to a profit in the first quarter, the company would have lost money without those deals.
Uber Returns to Its Old Form
Losses, not accounting for divestitures and certain expenses, doubled last quarter.
Khosrowshahi is searching for new businesses. In the last few months, Uber bought a startup that rents electric bicycles, invested in another one that rents electric scooters and went to work on its own scooter-rental business.
Alongside its US ride-hailing rival Lyft, Uber is on track to roll out scooters in Santa Monica, California and is expected to beat out upstarts Bird Rides Inc. and Lime for regulatory approval.
Since Uber was founded in 2009, the business has burned through more than $11bn. But thanks largely to the generosity and optimism of investors, it’s not in danger of running out of money anytime soon. In Wednesday’s financial report, Uber said it had about $7.3bn in cash on hand.