On Thursday while disclosing the stats of Uber’s recent quarter, ending in June, the company revealed its biggest ever quarterly loss of $5.2 billion. Uber’s loss was more than the analyst predicted while its revenue was less than anticipated.
It was believed that since the company went public in May, its stock compensation expenditure has been rising, touching about $3.9 billion by the end of quarter. It contributed hugely to the staggering loss.
Besides, the company held being on an investment spree responsible for the mounting losses, but had no regret about it. Uber continued to invest in various services, including freight shipping, meal deliveries and discounts offers for its core ride-hailing business, in order to get an edge over its competitors.
Responding to investor anxiety, Uber CEO Dara Khosrowshahi said,”There’s a general sense that while we’ve grown fast, we’ve slowed down.” He added, “We could push the company to break even if we wanted to, frankly, but I think what you will see from us is…lower losses going forward while at the same time we aggressively invest in new growth levers. But there’s no doubt in my mind that eventually the business will be a break even and profitable business.”
The Company had given heads up to the investors about its not-so-good financial performance as earlier Khosrowshahi, told CNBC that 2019 would be its peak investment year and in 2020, 2021, the losses would come down.
In the last quarter, Uber’s business revenue increased 14% to $3.1 billion. Khosrowshahi was more positive about the company’s ride-sharing business than its Uber Eats business. He believed that the ride-sharing service would ‘turn more profitable over the next couple years’, while he didn’t expect the meal-delivery service to become profitable in the coming year or the year after. In this period company’s revenue from ride-sharing services grew just 2% to $2.3 billion, while its Uber Eats food-delivery service rose 72% to $595 million. The revenue from ride-hailing service dipped because of the one-time payments the company made for driver appreciation.
Presenting a more optimistic future plan, Khosrowshahi said the returns from ride-sharing service would allow Uber ‘to invest aggressively in the Eats business and also carry a bottom line that improves’.
In the days leading upto the company’s quarterly report, it laid off 400 employees from its marketing team as a restructuring move.