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Uber trims losses and grows business, plans new stock sale
[SAN FRANCISCO] Uber cut its losses almost in half and its ride bookings jumped 51 per cent since one year ago, the Silicon Valley ride-services firm said on Wednesday, showing that months of scandal and retreating from overseas markets has not slowed its business.
Uber Technologies Inc also reported a one-time gain of US$2.5 billion, income that came largely from selling its business units in Russia and Southeast Asia.
The overall improvement of the company's finances comes after a year of controversies that involved sexual harassment allegations, lawsuits from drivers and employees, allegations of trade secrets theft, federal investigations and the revelation of a massive data breach.
Also on Wednesday, Uber said it would hold a secondary stock sale for employees and existing investors that could total up to US$600 million. Coatue Management, a new investor, and existing Uber investors Altimeter and TPG will purchase the stock at US$40 apiece, valuing the company at about US$62 billion.
The deal does not bring in new money for the company but rather allows employees and investors to get some cash for their stock even as the company remains private, a sign that Uber management is trying to appease long-time shareholders antsy for a payout.
In Uber's previous secondary stock sale, which closed in January and was led by SoftBank Group Corp, there were so many eager sellers that shareholders could sell only a fraction of what they wanted.
Uber reported ride bookings of US$11.3 billion for the first quarter, up 4 per cent from US$10.8 billion in the previous quarter and 51 per cent from US$7.5 billion a year ago. Its revenue was US$2.6 billion, up 8 per cent from US$2.4 billion last quarter and up 73 per cent from US$1.5 billion a year ago.
When excluding the gain from Uber's sale of its Southeast Asia business to rival Grab and Russia business to competitor Yandex, as well as other one-time transactions, the company lost US$312 million, much less than the US$775 million it lost last quarter and an improvement from the US$598 million lost a year ago.
Uber said it spent US$700 million over five years in Southeast Asia and US$170 million on its Russia business during its more than three years there. Deals in these regions followed Uber's sale of its China business to competitor Didi in 2016, as overseas markets prove increasingly costly and difficult.
But Uber cautioned not to expect a profit any time soon.
The company plans to reinvest the money on growing its food-delivery and its bike-renting services. Uber last month bought JUMP, an electric bike service startup, as part of its effort to expand its transportation offerings.
"Given size of the opportunity ahead of us and our goal of making Uber a true mobility platform, we plan to reinvest any over-performance even more aggressively this year, both in our core business as well in big bets like Uber Eats globally," Uber chief executive officer Dara Khosrowshahi said.
Uber also still has risky and expensive businesses including its autonomous car unit, which has been under scrutiny since a self-driving Uber SUV hit and killed a woman in Arizona in March. Uber on Wednesday said it had shut down its Arizona self-driving car operation, although it plans to continue testing the vehicles in California and Pittsburgh, Pennsylvania.
The results reflect the second full quarter under Khosrowshahi's leadership, who replaced founder and former CEO Travis Kalanick after he was pushed out by investors. Khosrowshahi plans on taking the company public next year, and must trim losses and prove a path to profitability to satisfy public market investors.
But Uber still lacks a chief financial officer and has not had someone in the role since 2015, despite a protracted search, raising questions about the viability of a 2019 IPO.
The secondary stock transaction will launch next week and likely close in June, Uber said. The share price and valuation of the new deal exceeds the US$33 per-share price and US$48 billion valuation that the SoftBank consortium paid earlier this year, when it took a 17.5 per cent stake in Uber.