Uber Technologies failed to reassure investors of its growth potential, or that it can turn a profit anytime soon. The ride-hailing company reported second quarter adjusted sales that fell short of estimates and posted a net loss of US$5.24-billion, by far the largest ever for the business.
Most of the loss reported on Thursday was attributed to stock-based compensation associated with the initial public offering in May, a routine expense for newly public companies. The adjusted loss — a more commonly used metric for ride-hailing companies, which excludes interest, tax and other expenses — more than doubled to $656-million, but it wasn’t as large as the $979.1-million analysts expected.
What really raised concerns, though, was Uber’s disappointing sales growth. Adjusted revenue in the second quarter increased 12% from a year earlier, the slowest rate in the company’s history. The San Francisco-based company generated $2.87-billion in adjusted revenue for the second quarter, below estimates of $3.05-billion.
The stock slumped about 7% in pre-market trading in New York on Friday.
Uber hasn’t even been public for three months, but investors are wondering how long it can keep growing. CEO Dara Khosrowshahi suggested the business had a broader problem with bloat last week, when the company said it would cut about 400 employees in marketing.
On a call with reporters on Thursday, Khosrowshahi acknowledged those concerns, while defending the business as one with “growth rates that companies at our scale would kill for”. However, he said, “the law of large numbers at some point will catch up with you”.
Khosrowshahi emphasised signs of growth potential during a conference call following the report. Gross bookings, a number used to track customer demand, rose 31% to $15.76-billion. Uber expects to maintain that growth rate for the year, forecasting $65-billion to $67-billion in gross bookings. — Reported by Eric Newcomer, with assistance from Karen Lin, (c) 2019 Bloomberg LP
