Uber Technologies reported a record $5.2 billion (€4.6 billion) loss and revenue that fell short of Wall Street targets on Thursday as growth in its core ride-hailing business slowed, sending its shares down 6 per cent.
The company said a price war in the US was easing and that an important measure of profitability topped its target, but slowing revenue growth raised questions about Uber’s ability to expand and fend off competition.
"Losses are widening and the competition is cut-throat," said Haris Anwar, analyst at financial markets platform Investing. com. "What's sapping investor confidence and hitting its stock hard after this report is the absence of a clear path to grow revenue and cut costs."
Uber’s second-quarter net loss, widening from a loss of $878 million a year earlier, included $3.9 billion of stock-based compensation expenses related to its IPO earlier this year and nearly $300 million in “driver appreciation” related to the stock sale.
The report caught investors off guard in part because Uber's smaller rival Lyft on Wednesday had raised revenue expectations and described an easing price war.
Revenue growth
Uber reported that revenue growth slowed to 14 per cent to $3.2 billion and fell short of the average analyst estimate of $3.36 billion, according to IBES data from Refinitiv. The company’s core business, ride-hailing, grew revenue only 2 per cent to $2.3 billion. Food delivery Uber Eats grew 72 per cent to $595 million.
Gross bookings, a measure of total value of car rides, scooter and bicycle trips, food deliveries and other services before payments to drivers, restaurants and other expenses, rose 31 per cent from a year earlier to $15.76 billion. Analysts on average were expecting $15.80 billion.
Keeping less money
At the same time, Uber is keeping less money per car ride. The amount passengers spent on trips rose 20 per cent while the amount Uber kept after paying its drivers increased just 4 per cent.
Chief executive Dara Khosrowshahi said in a press call the competitive environment was starting to rationalize and had been "progressively improving" since the first quarter.
This year would be the peak for investment and losses would lessen in 2020 and 2021, he said.
- Reuters
