UBER has reported a $1 billion (£790m) loss as the ride-hailing service suffers a crushing start since entering the stock market this month.
The loss was unveiled on Thursday in the company’s first public quarterly earnings report.
But Chief Executive Dara Khosrowshahi maintained the company strategy was to keep spending in order to expand.
Khosrowshahi said: “We are now focused on executing our strategy to become an one-stop shop for local transportation and commerce.”
The tech giant has sunk money into its food delivery and freight businesses, sending revenues up 20 per cent.
The ‘product differentiation’ strategy has meant company costs and expenses has taken a $4.1 billion hit in the first quarter, up 35 per cent from a year earlier.
The loss came despite a 20 per cent rise in revenue of $3.1 billion, which matched the high end of the range Uber forecast for the quarter.
The $1 billion loss also similarly compared with the predicted forecast of $1.0 billion to $1.11 billion.
Khosrowshahi called executives soon after to instil faith in the business and shares subsequently rose 2.6 per cent.
The CEO cited business improvements, such as fewer consumer promotions in the second quarter, and called 2019 an “investment year.”
He added: “I’ve told our team it is just one moment in a longer journey.”
I’ve told our team it is just one moment in a longer journey.”
Uber Chief Executive Dara Khosrowshahi
FALLING SHARE PRICE
Uber launched on Wall Street on May 10 for its first full day of trading with a share price of $45.
At close of business on Thursday May 30, the price had fallen to $39.80 a share.
Current share price is trading more than 10 per cent below the IPO.
A net loss of $1.01 billion is $2.26 per share.
Khosrowshahi will have to convince investors Uber can turn a profit, given its reliance on rider incentives and competition in all parts of its business, from its core business of ride hailing to food delivery to freight.
“Our story is simple. We’re the global player,” Khosrowshahi told analysts.
“Our job is to grow fast at scale and more efficiently for a long, long time.”
RIDER BOOKINGS ON THE UP
The results indicate the newly public company was able to hit its own financial targets, likely to offer some assurance to investors.
Gross bookings, a measure of total value of rides before driver costs and other expenses, rose 34 per cent from a year ago to $14.6 billion.
Bookings were up only 3.4 per cent from the previous quarter, showing the difficulty of recruiting new riders in saturated markets.
Uber also said its monthly active users rose to 93 million globally, from 91 million at the end of the fourth quarter.
Some analysts said they were encouraged by improvements in take rates (revenue pocketed by Uber after subtracting driver or restaurant pay and incentives) and accelerating revenue growth.
Improvements across many key metrics were an important sign for investors.
SILICON VALLEY GOES PUBLIC
Uber was the biggest of a group of Silicon Valley startups that have gone public this year.
Uber also faces increased regulation in several countries and fights with its drivers over wages.
In the mature US market, where Uber’s main rival is Lyft Inc, Khosrowshahi said two levers for growth were the expansion of rides into suburbs and a generational wave, in which millennials show little interest in car ownership.
The company has invested in its growing food delivery service, Uber Eats.
Uber was “very early in the stages” of exploiting how ride-hailing can help its Eats business, where take rates would improve over 2019, Khosrowshahi said.
Reporting by Alexandria Sage and Arjun Panchadar.
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