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Uber's Robust Growth Makes Up For Losses, As Company Gears Up For IPO This Year

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Uber's Robust Growth Makes Up For Losses, As Company Gears Up For IPO This Year

Uber announced its fourth quarter 2018 earnings yesterday, reporting a net loss of $865 million and an adjusted pro-forma net loss of $768 million. Though the figures on the outset look better than Q3 2018 pre-tax net loss of $971 million, the Q4 2018 net loss was lessened due to a tax benefit, without which the net loss would have climbed to $1.2 billion. However, with or without the tax benefit, the figures have been a minor improvement from the third quarter.

Nonetheless, Uber does not seem to consciously look at stemming losses, with them being a consequence of its expansion exploits - as the company sinks its feet into various verticals like food delivery, electric bike-sharing, and freight hauling. In many ways, Uber looks to have retained its core philosophy of "go big or go home" - right from the times of Travis Kalanick aggressively expanding the cab-hailing business across international markets, to the current-CEO Dara Khosrowshahi launching Uber in different segments.

However, this is not 2010, and Uber's competition is no longer from traditional cab businesses and driver unions, but rather from companies that are equally sophisticated and hold pockets lined with investor money.

At present, the strategy of Uber looks to be about being ubiquitously present across all forms of road transportation, and build its way across any segment that either looks promising or predatory to its primary cab-hailing market. This was evident with its expansion into the electric bike-sharing segment, which reportedly ate into the cab-sharing market - especially during peak hours in urban spaces like San Francisco or New York. Uber has invested in Lime bike's $335 million financing round last year, and also bought JUMP, an e-scooter startup, for an estimated $200 million.

None of these decisions are random. Uber is caught in a rat race with its immediate U.S.-rival Lyft, as both the companies are going in for a public offering later this year. Though Uber is bigger than Lyft by a comfortable margin, being valued close to $120 billion to Lyft's $15 billion, Uber still needs to be wary of competition as investors would expect a strong performance near its IPO's dawning.

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Unlike Lyft, that is concentrating just on shuttling people only across North America albeit, through different modes, Uber is burning cash as it plans to seize every segment it steps into. For instance, Uber Eats, the food delivery company, is still in the process of market expansion and thus operates on slim margins, doing no good to Uber's bottom line. Food delivery services have been expensive to run for Uber, as it pays out commissions to restaurants and the last-mile delivery workforce, with not much left for it at the end of each transaction.

Uber's self-driving cars are finally seeing the light of day, after being halted for ten months due to its car fatally striking a pedestrian in Arizona. However, the autonomous driving segment has till now been a let-down for Uber, as it plays catch-up with companies like Google's Waymo and General Motors (GM) that have clocked many million miles with greater success.

That said, Uber's primary cab-hailing market performance has been good, as it grew its total bookings to $50 billion in 2018, a 45 percent increase from 2017. The net revenue also climbed by 43 percent to stand at $11.3 billion, a more than conclusive proof of its dominion in the market, despite competitors like Lyft in the U.S., and Ola in India. In 2018 last quarter, the gross bookings - amount collected before drivers are paid out - rose by 11 percent from Q3 to $14.2 billion, with revenue increasing by 2 percent quarter-over-quarter to $3 billion.

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Posted-In: Earnings Growth Freight Freightwaves UberEarnings News Markets General Best of Benzinga

 

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