SAN FRANCISCO — Uber set two doubtful quarterly information Thursday because it reported its outcomes: its largest-ever loss, exceeding $5 billion, and its slowest-ever income progress.
The double whammy instantly renewed questions concerning the prospects for the corporate, the world’s largest ride-hailing enterprise. Uber has been dogged by issues about sluggish gross sales and whether or not it may earn money, worries that have been compounded by a disappointing preliminary public providing in May.
For the second quarter, Uber stated it misplaced $5.2 billion, the biggest loss because it started disclosing restricted monetary knowledge in 2017. A majority of that — about $3.9 billion — was brought on by stock-based compensation that Uber paid its staff after its IPO. Excluding that one-time expense, Uber misplaced $1.3 billion, or practically twice the $878 million that it misplaced a yr earlier. On that very same foundation and excluding different prices, the corporate stated it anticipated to lose $3 billion to $3.2 billion this yr.
Revenue grew to $3.1 billion, up 14% from a yr in the past, the slowest quarterly progress fee the corporate has ever disclosed.
“We think that 2019 will be our peak investment year,” Dara Khosrowshahi, Uber’s chief govt, stated in an interview, noting that he anticipated losses would decline over the subsequent two years. “We want to make sure that the kind of growth we have is healthy growth.”
He added that there have been different positives. Uber’s bookings — the cash it will get from rides and deliveries earlier than paying commissions to drivers — rose 31% from a yr in the past. The firm additionally added clients, totaling greater than 100 million month-to-month energetic riders for the primary time.
The outcomes continued to forged a shadow over Uber, sending its inventory falling in after-hours buying and selling. The firm, whose progress as soon as rose like a rocket ship because it upended conventional transportation and barreled into markets around the globe, was anticipated to be valued at about $120 billion at its IPO this yr. But Uber dropped beneath its $45 providing worth on its first day of buying and selling and has solely briefly risen above that share worth since. Khosrowshahi has been criticized for the way in which that Uber went public and has confronted questions on how he intends to revive progress.
“What we’re looking for is evidence that the company can reaccelerate revenue growth after the last few quarters,” stated Tom White, a senior vice chairman on the monetary agency D.A. Davidson.
The ride-hailing business has confronted scrutiny in latest months for the way in which its companies burn cash with no imminent probability of income. Companies should consistently spend freely for incentives to draw passengers and drivers and to fend off competitors. Both Uber and its rival Lyft have been questioned by traders this yr about their enterprise fashions as they ready to record on the inventory market.
Lyft has additionally reported a collection of deep losses. This week, it stated it misplaced $644.2 million within the second quarter, although it added that it anticipated that quantity to abate. Several months earlier, Lyft had additionally posted a very steep loss associated to stock-based compensation payouts to its staff.
Like many expertise startups, Uber and Lyft recruited staff with inventory choices that they stated may make the employees rich when the businesses went public. The prices of that follow have now materialized. Uber stated it projected spending $450 million to $500 million on stock-based compensation within the third quarter.
At Uber, Khosrowshahi has been working to chop prices and shift administration. In June, he ousted two high executives: the chief working officer and the chief advertising officer. Last month, he laid off a 3rd of the advertising workers, or about 400 individuals, which he stated throughout an earnings name was needed to hurry up the staff’s decision-making. Three board members have additionally stepped down since Uber’s IPO.
Uber’s board adjustments have been led by the corporate’s chairman, Ron Sugar, Khosrowshahi stated Thursday. He added that they have been a part of a pure shift after a public providing.
“This is a different Uber,” he stated within the interview. Since the IPO, “I get to spend more time internally with our employees. What I’m insisting on is excellent execution.”
Khosrowshahi stated Uber, which had been competing with Lyft by providing closely discounted rides to lure riders, has seen that worth battle subside.
“The competitive environment, which got worse in the second half of last year, is progressively improving now,” he stated.
Although Uber has relaxed its reductions for rides, the meals supply enterprise remains to be extremely aggressive and the corporate plans to take a position extra aggressively in that space, he stated. Uber’s meals supply enterprise, Uber Eats, greater than doubled its variety of month-to-month clients within the quarter.
Uber, which aspires to develop into an Amazon-like retailer for all types of transportation, can also be investing within the improvement of autonomous automobiles, public transit offers, the growth of its bicycle and scooter enterprise, and in its freight supply platform. The firm plans to roll out extra choices for shared rides, resembling its carpooling and public transit options.
The employment standing of ride-hailing drivers stays a difficulty for Uber, which classifies them as impartial contractors, saying the work is versatile. The categorization additionally signifies that Uber doesn’t want to offer drivers with full-time advantages. Yet regulators in New York have set a minimal wage for ride-hailing drivers and California legislators are contemplating a invoice that might reclassify drivers as staff.
Khosrowshahi characterised the adjustments in New York as “malarkey” and stated that elevated driver wages have been handed on to riders, which makes the service unaffordable for lower-income passengers. In California, Uber is negotiating with lawmakers over the proposed laws, he stated.
“We do believe there can be a win-win scenario here,” he stated.