Published: Sun, August 11, 2019
Money | By Ethel Goodwin

Uber sees biggest-ever quarterly loss: $5bn in three months

Uber sees biggest-ever quarterly loss: $5bn in three months

Uber reported that revenue growth slowed to 14%, and the company's core business, ride-hailing, grew revenue only 2% to $2.3 billion.

But the San Francisco-based company lost $664.2 million in the quarter, which was worse than the $445 million loss that analysts polled by FactSet expected.

The earnings miss comes just a day after Uber's top USA competitor Lyft beat analyst expectations for its performance in the second quarter, sending shares up as much as 8%.

News of Uber's mounding losses arrives a day after its major USA competitor, Lyft posted revenue of $867 million for the quarter on net losses of $644 million.

But Uber's loss widened to $5.2bn (£4.3bn) in the three months to 30 June, from $878m in the quarter previous year.

The company announced last month that it would be cutting 400 jobs from its marketing team as it aims to get costs under control.

Uber has attributed the large quarterly loss to stock-based compensation relating to its IPO.

The report caught investors off guard in part because Uber's smaller rival Lyft Inc on Wednesday had raised revenue expectations and described an easing price war.

Nelson Chai, the chief financial officer of the company said while they will continue to invest proactively in growth, it needs to be healthy growth, and made good progress in that direction this quarter.

The charge is a normal cost for newly public companies, though Uber's figure is larger than usual because of its size.

At some point, Uber is expected to spend another $2.5 billion on stock compensation, said Mandeep Singh, a senior analyst for Bloomberg Intelligence.

However, on its core ride-hailing business, Khosrowshahi reiterated that Uber, which is battling Ola, has proved its ability to win the market.

FILE PHOTO: Uber's logo is seen on a smartphone screen as a picture of stock exchange graph is displayed on a computer screen in this illustration picture, May 7, 2019.

Both Uber and Lyft relied heavily on subsidizing fares to attract riders.

But it is Uber that leads the market in active riders and has a wider presence globally. Most of Uber's growth is now coming from its food delivery business.

"The competitive environment, which got worse in the second half of previous year, is progressively improving now", he said.

Uber has struggled to enter European markets, as taxi companies have fervently opposed them and successfully lobbied their governments to either ban it or strictly control its operations.

Food delivery Uber Eats grew 72 per cent to $595 million.

ET had earlier reported that Uber has halved its annual cash allocation to its food-delivery business in India to $90-120 million. Dara Khosrowshahi, Uber's CEO, said on a conference call with analysts Thursday after the earnings report.

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