21 August 2019
Uber has cut its losses after retreating from some markets, but still has a long way to go on the path to profitability. Photo: Bloomberg
Uber has cut its losses after retreating from some markets, but still has a long way to go on the path to profitability. Photo: Bloomberg

Uber narrows loss but still far from profit

Uber Technologies, the ride-hailing services firm which aims to go public next year, narrowed its quarterly losses from a year earlier, but appears to be still a long way from turning a profit.

The San Francisco-based firm reported on Wednesday that its net loss narrowed to US$891 million in its second quarter ended June from US$1.1 billion a year earlier.

Adjusted loss before interest, taxes, depreciation and amortization was US$614 million, down from US$773 million a year earlier, Reuters reports.

Net revenue rose more quickly than gross bookings in the second quarter from the prior period as the company dialed back on promotional subsidies of rides.

But its growth faces risks from decisions like that by New York City this month to cap licenses for ride-hailing services for one year, the report noted.

Uber has also had to grapple with corporate scandals and has lingering and costly legal battles, including over its classification of drivers as independent contractors, and federal probes to resolve.

Under the leadership of Dara Khosrowshahi, who became CEO in September, Uber has juggled investing in new markets while retreating from others where it was losing millions of dollars.

It is building up services like food delivery and freight hauling as it seeks new revenue, and possibly a path to profitability, outside its core business.

“I remain unimpressed,” Brent Goldfarb, associate professor of management and entrepreneurship at the University of Maryland, told Reuters.

Improving losses by cutting “the lowest hanging fruit doesn’t mean the underlying model is profitable,” he said.

Uber had US$12 billion in quarterly gross bookings, which includes rides and Uber Eats, up 6 percent from the previous quarter and about 40 percent from a year before.

Net revenue, which strips out what gets paid to drivers as well as promotions and refunds, was US$2.8 billion, up 8 percent over the first quarter and more than 60 percent from last year.

“We had another great quarter, continuing to grow at an impressive rate for a business of our scale,” Khosrowshahi said in a statement.

While Uber has retreated from China, Southeast Asia and Russia, it says it is sticking with India and the Middle East, tough markets with strong local competitors.

Several Uber investors have told Reuters they want the firm to leave these costly markets too and focus on North America, and pull back on ancillary businesses like Uber Freight.

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