Losses mount but Uber tips profitability in 2021

The number of monthly active consumers across all Uber platforms grew to 103 million, up 26 per cent from the same time last year.
Camera IconThe number of monthly active consumers across all Uber platforms grew to 103 million, up 26 per cent from the same time last year. Credit: AP

The losses at Uber are mounting, but the ride-hailing heavyweight now predicts it will be profitable in about two years.

Chief executive Dara Khosrowshahi told reporters Monday that the company’s goal is to reach profitability — when adjusted for interest, taxes, depreciation and amortisation — for the full year of 2021.

“While we will of course continue to invest in growth and the power of our platform, especially in some of our newer, high-potential businesses like Eats, we will continue to be thoughtful stewards of capital, make tough decisions where necessary, and make any dollar investment count,” Mr Khosrowshahi said.

The San Francisco company picked up the pace of its revenue growth, racking up $US3.81 billion ($5.5 billion) in the third quarter, 30 per cent more than the same time last year.

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But it lost $US1.16 billion in the quarter, extending its streak of losses. The third-quarter loss included $US401 million in stock-based compensation related to its initial public offering.

The loss amounted to US68¢ a share and was wider than the $US986 million shortfall in the same period last year.

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The per-share loss in the latest quarter, however, was smaller than what Wall Street had expected. Analysts were forecasting a loss of US82¢a share, according to FactSet.

Its revenue also topped expectations for $US3.63 billion in the quarter.

Uber convinced more people to use its array of products. The number of monthly active consumers across all its platforms grew to 103 million, up 26 per cent from the same time last year.

Last month, executives at Lyft said they expect the rival ride-hailing company to become profitable in the fourth quarter of 2021.

Both Uber and Lyft are facing potentially higher costs for paying drivers. In September, California passed a law requiring ride-hailing drivers to be classified as employees, which could entitle them to minimum wage, benefits and workers compensation. In response, Uber and Lyft proposed a ballot initiative aiming to exempt their companies from the new law.

“We think that there’s a better answer out there,” Mr Khosrowshahi said.

VideoIt will now be competing with Uber and Ola for a share of the market.

California’s new law was figured into Uber’s future profitability prediction, and Uber is already operating within similar laws in states such as Massachusetts, New Jersey and Connecticut, he said.

California represents 9 per cent of Uber’s global rides and eats bookings, Mr Khosrowshahi said.

In New York City, where regulations forced ride-hailing companies to increase prices, it “definitely hurt volumes in the outer boroughs where people need transportation the most,” Mr Khosrowshahi said. But despite raising prices in some markets, frequency of use of Uber’s services is increasing, he said.

Some analysts are concerned that a deluge of Uber stock will flood the market later this week when a lock-up period expires, allowing major shareholders, including company executives and investors, to sell their shares.

“There could be an avalanche of selling as insiders and early private investors head for the exits,” said Dan Ives, managing director at Wedbush Securities.

During the third quarter, Uber reorganised its financial reporting into five segments: Rides, Eats, Freight, Other Bets — which includes bikes, scooters and transit — and Advanced Technologies Group, which includes autonomous vehicles.

That increased transparency around the business units is a step in the right direction, Mr Ives said.

Uber’s stock price, which closed Monday at $US31.08, has lost nearly a third of its value since its initial public offering in May.

The stock was down about 5 per cent in after-hours trading following the earnings report.


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