Uber Technologies Inc reported a record loss of $ 5.2 billion and revenue that did not meet Wall Street targets on Thursday as growth in its flagship hailing business slowed, leaving its stake down 6%.
The company said a price war in the United States was easing and that a significant measure of profitability reached its target, but the slowdown in revenue growth raised questions about Uber’s ability to expand and protect competition.
“Losses are expanding and competition is stiff,” said Haris Anwar, analyst at financial markets platform Investing.com. “What is undermining investor confidence and hitting its stocks hard after this report is the lack of a clear path to boost revenue and reduce costs.”
Uber’s second-quarter net loss, expanding from a $ 878 million loss a year ago, included $ 3.9 billion of share-based compensation expenses related to its IPO earlier this year and nearly $ 300 million in “driver rating” in connection with the sale of the shares.
The report caught investors off guard because Uber Lyft Inc (O: LYFT) ‘s smallest rival on Wednesday had raised revenue expectations and described a price easing war.
Uber’s stock had risen more than 8% and Lyft had gained 3% during the day. Following Uber’s report, its shares fell 6% and Lyft fell by nearly 2%.
Uber reported revenue growth slowed to 14% at $ 3.2 billion and fell slightly below the average analyst estimate of $ 3.36 billion, according to IBES data from Refinitiv. The company’s core business, travel greetings, increased revenues by only 2% to $ 2.3 billion. Uber Eats food delivery increased 72% to $ 595 million.
Gross bookings, a measure of the total value of car rides, scooters and bike rides, food distribution and other pre-payment services for drivers, restaurants and other expenses, increased 31% from a year earlier to $ 15.76 billion . Analysts expected an average of $ 15.80 billion.
At the same time, Uber is keeping less money for car travel. The amount of passengers spent on travel increased 20% while the amount Uber carried after paying its drivers increased only 4%.
Chief Executive Officer Dara Khosrowshahi said in a press release that the competitive environment was beginning to rationalize and that it had been “progressively improving” since the first quarter.
This year would be the peak of investment and losses would be reduced in 2020 and 2021, he said.
Lyft on Wednesday said prices had become “more rational”, meaning the company had to spend less on promotions and incentives to gain market share. She raised her income perspective.
Both companies have historically relied on subsidies to attract motorcyclists and have spent much to expand services in areas such as self-driving technology for Lyft and food distribution for Uber.
Uber costs rose 147% to $ 8.65 billion in the quarter, including a sharp increase in research and development spending.
“While we will continue to invest aggressively in growth, we also want it to be healthy growth, and this quarter we have made good progress in that direction,” Chief Financial Officer Nelson Chai said in a statement.
The adjusted loss before items, including interest, tax and stock-based compensation more than doubled to $ 656 million, but it was better than expected by the company, Uber said. It also reached Wall Street targets for a $ 996 million loss.
Gross reserves for this year would be $ 65 billion to $ 67 billion, he said, in line with Wall Street’s target of $ 65.9 billion.
The company, which has not yet clarified whether it will make a profit, is trying to convince investors that growth will come not only from its travel services, but also from other logistics and food distribution services.
Uber said its monthly active users grew to 99 million globally, up from 93 million at the end of the first quarter and 76 million a year earlier./Investing.com