Washington: Uber disappointed investors with second-quarter results that showed a big hit from costs related to its initial public offering, even as the ride-hailing giant said competitive pressures in the loss-making industry were easing.
Its net loss ballooned to $5.2 billion from $878m a year ago, in line with Wall Street’s estimates, according to S&P Global Market Intelligence. That included $3.9bn in stock-based compensation expenses related to the IPO. Revenue rose 14 per cent to $3.2bn, missing analysts’ expectations of $3.4bn and slowing from the first quarter’s 20pc growth rate.
The company said both top and bottom line figures reflected the impact of its stock market flotation in May, which raised $8bn.
Uber listed at $45 per share and has only briefly traded above that level. In after-hours trading following the results, the stock dropped as much as 13pc to $37.39 before rebounding somewhat. It had risen more than 8pc during Thursday’s official trading session, reflecting comments from rival Lyft that said competition between ride-hailing groups in the US was easing.
Uber chief executive Dara Khosrowshahi said the company was benefiting from an emerging detente in the price wars that have long kept Uber and its rivals in the red.
“The competitive environment in most of the markets that we’re competing (in) are stable or improving, or our competitive tactics are improving,” he told analysts on a conference call.
Both Uber and Lyft spend heavily to subsidise fares and attract drivers, but since the companies went public earlier this year, they have come under increasing pressure to show a path to profitability. Lyft said that it had raised prices in late June and raised its 2019 financial forecasts.
Khosrowshahi acknowledged the questions surrounding the company. “There’s a meme around which is, can Uber ever be profitable? I have certainly heard that meme.” He said he believed Uber had the potential to build “a spectacular business long term” in ride-hailing and food delivery.
Khosrowshahi pointed to Uber’s core platform contribution margin – a measure of how much money the company makes from rides and food delivery after direct costs – as evidence of its improving economics. The metric rebounded to 8pc in the second quarter from a negative 4.5pc in the first three months of the year. It was below the 14.7pc level reached a year ago, however, showing there is still a way to go.
“Bottom line: as a growth company, you have to beat your revenue numbers, and that didn’t happen this quarter,” said Gene Munster, an analyst at Loup Ventures. “Uber has many moving parts to their story.”
The company has made clear it intends to keep spending – on self-driving cars, bikes and scooters, freight delivery and other ventures – even as it takes a more measured approach to discounting fares.