Uber’s second quarter report reveals $5.2 billion in net losses
The ride-hailing pioneer company — Uber has recently delivered disappointing second-quarter results for 2019, as its shares dropped as much as 12% before settling down about 4%.
Net losses for Uber soared to $5.24 billion in second-quarter of 2019, largely owing to stock-based compensation. The losses represent the company’s largest-ever quarterly loss. Meanwhile, revenue, for its part, is up only 14% year-over-year, igniting concerns over slower-than-ever growth.
Notably, Uber has disclosed earnings for the second time since becoming a public company, reporting revenues of $3.16 billion. The company claims that a majority of 2Q losses are a result of stock-based compensation expenses for employees following its May IPO. Even if we keep stock compensation aside, Uber still lost $1.3 billion, up 30% from last quarter. As the company states in the investor blog,
“We think that 2019 will be our peak investment year and we think that 2020, 2021, you’ll see losses come down. I think our break-even is something that we can push the company to break even if we really wanted to frankly.”
It is worth mentioning here that over the past decade, Uber helped establish ride-hailing in markets all over the world as it has been investing in and operating myriad “on-demand” businesses including food delivery, bike-sharing and freight service that matches shippers with carriers who can haul their goods.
Uber’s core ride-hailing business generated $12.19 billion in gross bookings during the second-quarter of 2019, beating analysts’ estimate of $12.11 billion in gross bookings. But the newer, Uber Eats business generated $3.39 billion in gross bookings falling short of analysts’ expectations of $3.51 billion in gross bookings.
Uber CEO Dara Khosrowshahi believes that;
“The Eats business is still a business that carries very significant growth going forward and that continues to attract a lot of capital. Not just in the US, but all over the world. With the eats business, there’s a lot of capital chasing a lot of growth and we’re the leader on a global basis. So, I don’t expect that business to be profitable in the next year or year after frankly.”
In recent weeks, Uber cut approximately 400 jobs from its marketing team. The company boasted over 30 million riders in 2018. In July, the Uber platform reached over 100 million “Monthly Active Platform Consumers” for the first time, the company reported recently.