Uber Posts Huge Loss
Uber Technologies Inc. recorded its largest-ever quarterly loss as it was weighed down by heavy competition in Latin America and elsewhere, as well as a big expense related to its initial public offering. Revenue at the ride-hailing company climbed 14% to $3.17 billion in the second quarter, its smallest quarterly increase on record and below analysts’ expectations of $3.3 billion. Shares of Uber, which closed Thursday 4.5% below the May IPO price, fell as much as 12% in after-hours trading.
The results show that Uber is still growing its overall business, but continuing to struggle with high levels of competition throughout the world—and still paying heavy levels of rider subsidies and driver incentives that have been a key part of ride-hailing since its inception a decade ago.
Analysts and investors are still expecting years more of losses for Uber and the overall ride-hailing sector, a factor that has weighed on its stock and that of rival Lyft Inc. The company said it expects losses to start narrowing and gave an outlook for the year better than analysts expected, targeting a loss of $3 billion to $3.2 billion, when excluding charges like interest, taxes and depreciation.
Chief Executive Dara Khosrowshahi told reporters the company’s bookings, which include money the company pays drivers, are still increasing at an impressive rate—above 30%—and he is confident driver subsidies will fall long term as the company keeps expanding in areas like Uber Eats food delivery.
“We continue to have newer markets. We continue to have businesses like Eats that have amazing growth rates,” he said, adding that he thinks 2019 will be the company’s peak year of losses, which should start to narrow in 2020 and beyond.