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Feb 6, 2020

Uber forecasts first-ever quarterly profit by end of year

Uber will take off in 2021 if it finds a way to break even: Analyst

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Uber Technologies Inc. edged out Wall Street’s expectations last quarter, with growth in bookings and a loss that was narrower than analysts’ estimates.

Gross bookings for the fourth quarter were US$18.1 billion, showing demand for transportation and food delivery orders continues to grow. The measure, which represents the total value of rides, food orders and other businesses, is closely watched by investors.

An effort to rein in spending is proving to be especially effective. The San Francisco-based company reported an adjusted loss of US$615 million, compared with a US$713 million average of analysts’ estimates compiled by Bloomberg. The loss, which excludes interest, taxes and other expenses, was US$817 million in the same quarter a year earlier.

Uber is trying to more closely connect its various services and increase usage among the more than 100 million customers who open the app each month. The company is investing in electric bicycle and scooter rentals and experimenting with helicopter rides and temporary staffing.

The new businesses are pricey, though, and investors have punished the company for burning cash to fuel growth. The stock, which went public in May, trades below its initial offering price. Uber said Thursday that its loss for the year using generally accepted accounting principles was US$8.51 billion. The startling figure was driven primarily by stock compensation and one-time costs associated with the IPO.

In the last year, Uber has taken steps to check its spending habit. It reduced marketing expenses, cut more than 1,000 employees and abandoned some unprofitable food delivery units. It ended delivery in South Korea and sold the delivery operation in India last month.

During the last quarterly report, Uber said it would post a first adjusted profit by the fourth quarter of 2021. It didn’t provide a forecast in Thursday’s report. The stock was little-changed in extended trading.

The ride-hailing business was profitable on a standalone basis in the fourth quarter, Uber said. The company lost US$130 million on its “other technology programs,” including the autonomous driving division, which is funded by Uber, SoftBank Group Corp., Toyota Motor Corp. and others.

Uber didn’t disclose the amount it spent battling government initiatives, like California’s Assembly Bill 5, a new law that seeks to reclassify gig economy workers as employees. Regulators in Colombia, London and parts of Canada have all moved to ban the service from operating, and Uber, in most cases, is appealing those decisions. The U.S. and Canada accounted for most of Uber’s revenue in the fourth quarter.