Croxon: Uber will make inevitable progress, lawsuit against it just another distraction
Like his predecessor, Uber Technologies Inc. Chief Executive Officer Dara Khosrowshahi is putting growth above profit. But gains are proving harder to come by since the ride-hailing service has reached a global scale.
Nearly a year into Khosrowshahi’s tenure, Uber reported on Wednesday a second-quarter loss of US$891 million. While it’s a 16 per cent improvement from a year earlier, the loss follows a rare profit posted in the first quarter, thanks largely to the sale of overseas assets.
Even after increased spending last quarter, revenue growth is slowing. Sales rose 63 per cent to US$2.8 billion in the second quarter compared with the same period last year. The rate in the first quarter was 70 per cent.
Uber is privately held but chooses to release some quarterly financial details to its large body of investors and to the public. The company is targeting an initial public offering in the second half of next year, but it still doesn’t have a chief financial officer after years of searching.
Khosrowshahi is pouring large, undisclosed sums of money into food delivery, logistics and autonomous-car technology. The San Francisco-based company has said the food delivery business, Uber Eats, represents more than 10 percent of its gross bookings. Growth in that segment may be masking a slowdown in Uber’s main business. Earlier Wednesday, technology news site the Information reported that Uber is spending $125 million to $200 million a quarter on self-driving cars, and the company has fielded calls from investors to sell the unit.
While Uber sees potential for geographic expansion, the ride-hailing service is, for the most part, already global. The company has retreated from markets like China, Russia and Southeast Asia by selling them to regional competitors. While two of those sales pushed Uber to a profit in the first quarter, the company would have lost money without those deals.
Khosrowshahi is searching for new businesses. In the last few months, Uber bought a startup that rents electric bicycles, invested in another one that rents electric scooters and went to work on its own scooter-rental business. Alongside its U.S. ride-hailing rival Lyft Inc., Uber is on track to roll out scooters in Santa Monica, California, and is expected to beat out upstarts Bird Rides Inc. and Lime for regulatory approval.
Since Uber was founded in 2009, the business has burned through more than US$11 billion. But thanks largely to the generosity and optimism of investors, it’s not in danger of running out of money anytime soon. In Wednesday’s financial report, Uber said it had about US$7.3 billion in cash on hand.