NYSE-listed ride-hailing giant Uber Technologies reported a loss of $1 Bn in first quarter of 2019, more than double of its loss in the same quarter last year. Interestingly, the losses were expected as Uber had already told its investors that it may never make profits at the time of its IPO.
The financial results come almost three weeks after the company went public with $82 Bn market capitalisation. Industry watchers have since wondered how the company can trim its losses amid increased competition.
Here are some key metrics of the company’s Q1 performance:
- Loss from operations was $1.03 Bn, wider than the $478 Mn reported last year
- Sales and marketing costs jumped 54% reached $1.04 Bn driven by increased consumer promotions as well as by advertising and marketing headcount
- Company’s ridesharing revenue grew 9% reaching $2.37 Bn
- UberEats’ revenue grew 89% reaching $536 Mn
- Gross ride sharing bookings increased 22% reaching $11.4Bn
- Uber’s ride-hailing adjusted net revenue divided by bookings was about 20%, compared with 23% last year
Addressing investors and analysts during earnings call, Uber chief executive Dara Khosrowshahi acknowledged the company’s fierce competition around the world, but said much of the aggressive pricing appears to be abating in certain big markets.
“We’ve more recently seen signs of competition becoming more focused on brand and products, versus incentives. We think it is a healthy trend for the business,” he added.
He also went on to outline the ways Uber can grow in future which includes integrating with public transportation options, launching in partnership with taxis in Japan and upselling Uber’s other customers who buy food from Uber Eats or ride its scooters.
Khosrowshahi said there “absolutely will be consolidation” and signaled that Uber could take part in any acquisitions that make long-term sense. This future-ready approach is essential to the company’s survival in the face of increased scrutiny with being public and the competition from the likes of Lyft and Ola.
Indian rival Ola has been the leading player in India in terms of market share and has already expanded abroad with investments of over $60 Mn. The Bhavish Aggarwal and Ankit Bhati-led company has been feeding off Uber’s diminishing presence in Indian market and the global shutdowns.