Uber Technologies Inc., which has shown it can dominate the ride-sharing industry, has yet to prove to Wall Street that it can make money, and hangs on to its ultimate unicorn status.
The company reported its third-largest loss since it started reporting results two years ago, a staggering $1.2 billion hit to the bottom line. Still, shareholders were told not to despair — the company sees profitability by the end of 2021.
Despite the rapid growth of the ridesharing industry, which is projected to generate about $50 billion in revenues this year, the company has been hemorrhaging money, the result of a top-heavy payroll, management missteps and obligations to stockholders whose shares have come due. Last quarter, Uber paid $3.7 billion in stock compensation related to its IPO.
The company has faced other obstacles, including increased competition, regulatory scrutiny and withering criticism about how it operates. A bill passed in September by California, one of Uber’s largest markets, may require the company to recategorize some drivers as employees and require it to pay benefits. Uber, main rival Lyft, and Doordash, with whom it competes in the growing food delivery space, plan to introduce a ballot measure granting on-demand services an exemption.
Some critics have even questioned the company’s ability to relieve congestion and reduce emissions, core Uber principles. A New York University report released Monday found that 13 cities worldwide were considering regulations targeting work conditions at ridesharing companies, along with environmental concerns.
Uber highlighted a 30% revenue increase to $3.81 billion and a 29% growth in gross bookings from a year earlier. CEO Dara Khosrowshahi touted “the growing profitability of” Uber’s core “Rides segment,” and “revenue growth and take rates in our Eats business” on an earnings call.
Since taking over in 2017, Khosrowshahi has tried to boost margins by cutting 1,200 positions, discontinued discount and incentive programs and exited markets where Uber was unlikely to hold a leading market share. He’s also tried to reposition the company as a multi-faceted provider of consumer services, including food delivery, freight and micro-mobility.
- Adjusting for interest, taxes, depreciation and amortization, Uber’s recorded a $585 million loss. While that was better than analysts projections by more than $200 million, it was higher than the $458 million loss for the same period a year ago.
- The company operates in more than 700 cities in 69 countries.
- Uber finished the quarter with about $12.7 billion in cash, which it could spend on growth initiatives.
- Ridesharing revenues are expected to hit $75 billion by 2023 — a 50% gain from this year, according to Statista.