Uber loses $1.2B in the most recent quarter

Uber logo

Better than expected revenues couldn't divert investor attention from the fact that Uber still managed to lose more than $1 billion in the most recent quarter as the company's stock fell in after-hours trading.

Quarterly adjusted revenue increased 33% to $3.5 billion, above estimates of $3.39 billion.

Uber Chief Executive Dara Khosrowshahi told journalists on a conference call the company as a whole would achieve adjusted EBITDA profitability for the full year of 2021, but declined to provide details on the performance of individual business units by that time.

The loss included US$401 billion in stock-based compensation at the San Francisco-based company, which recently reorganised operations to cut costs.

Gross bookings grew to $16.5 billion, which was 29% more than the same time a year ago, but lower than the $16.7 billion expected by analysts polled by FactSet.

Overall, the company's net loss widened to $1.16bn in the three months ended September 30, from $986m a year earlier, while net loss on a per-share basis narrowed to 68 cents from $2.21.

Known for its ride-hailing app available in more than 700 cities worldwide, Uber has vastly diversified its business over the past few years.

Uber posted a US$1.2 billion ($1.8b) loss Monday on healthy revenue growth, a better-than-expected result almost six months after its May initial public offering.

Uber's valuation has been sliced by a third since it was listed on the stock market at US$45 in May. They were heavily focused this week on whether Uber could maintain enough cash on hand to keep itself afloat in the face of significant losses, even as the company's dominant market share - 70 per cent or more, according to IPO documents from both companies - gave it an upside over its rival.

Uber's shares are expected to be further pressured on Wednesday, when a restriction on selling stock lifts. Some analysts expect more than 80% of the company's outstanding shares will become eligible for sale.

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The loss amounted to 68 cents a share and was wider than the $986 million shortfall in the same period a year ago.

Uber revenue was up 30 per cent to US$3.8 billion in the quarter on growth in its shared rides service as well as its Eats restaurant meal delivery and its Freight platform that matches shippers with truckers.

Sales from Uber Eats, the company's fastest-growing unit, rose 64%, but almost 40% of revenues were spent on incentive and referral payments, as Uber tries to gain market share.

"There is a lot of supply that is going to hit the marketplace, so you don't know what is really going to happen", Uber chief financial officer Nelson Chai said of shares being unlocked.

Uber hopes its ride-hailing business will come in handy, allowing the company to undercut competitors' delivery costs by having drivers ferry around pizzas instead of passengers when demand is low.

The law challenges the business model of the rideshare platforms and others which depend on workers taking on "gigs" as independent contractors. California legislation created to push Uber, Lyft, DoorDash Inc. and other gig-economy to reclassify independent contractors as employees goes into effect in January and could increase costs in the state by as much as 30%, according to analyst estimates.

Khosrowshahi on Monday said he was hoping USA politicians would be willing to work with the industry.

"But if not, we'll continue to aggressively defend our drivers' right to flexibility", the CEO said.

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