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.
There are bright spots in the latest earnings report, not least that the company managed to stanch the bleeding that had cost the company over $5 billion in the previous quarter.
Revenue grew to $3.8 billion, up from $2.9 billion in the year-ago period, representing a 30% boost. But even as Uber’s core business shows signs of stabilizing and its core markets continue to show growth, its other business units appear to be hemorrhaging cash at increasingly high rates.
“Our results this quarter decisively demonstrate the growing profitability of our Rides segment,” said Dara Khosrowshahi, the company’s chief executive, in a statement. “Rides Adjusted EBITDA is up 52% year-over-year and now more than covers our corporate overhead. Revenue growth and take rates in our Eats business also accelerated nicely. We’re pleased to see the impact that continued category leadership, greater financial discipline, and an industry-wide shift towards healthier growth are already having on our financial performance.”
Losses in earnings at the company’s Uber Eats business grew 67% to $316 million from $189 million in the year-ago period. And performance in the company’s freight division looks even worse. Losses in freight ballooned by 161%, growing to $81 million from $31 million in the same quarter of 2018.
Also contributing to the company’s losses for the quarter were stock-based compensation expenses, which added another $401 million to the tallies against the company.
Given that the lock-up period is about to end for institutional investors, that could spell even more trouble for the company — as institutional investors who bought into the company before its public offering may look to sell.
That said, Uber has taken a number of steps to correct its course and put the company on a path to profitability, which Khosrowshahi says should happen in the next two years.
In October, the company announced the last of three rounds of sweeping layoffs at the company that saw 1,185 staffers lose their jobs. Khosrowshahi called the layoffs a chance to ensure that the company was “structured for success for the next few years.” In an email to staff, he wrote, “This has resulted in difficult but necessary changes to ensure we have the right people in the right roles in the right locations, and that we’re always holding ourselves accountable to top performance.”
With the layoffs behind it, Uber can now focus on some of the big operational challenges it had set for itself through the reorganization that the company has announced. That includes adding new features and technologies to its Uber Eats delivery program (despite what recent losses at GrubHub may imply about the food delivery business) and pressing forward with another darling of the tech set these days — the company’s financial services platform.
The launch of this new platform, coupled with a slew of announcements from the company in September, show that Uber may have dialed back on its ambitions, but not by much. As Khosrowshahi said at the event, “We want to be the operating system for your everyday life…. A one-click gateway to everything that Uber can offer you.”