Uber lost US$8.5 billion in 2019 yet Uber CEO Dara Khosrowshahi said on the business’ earnings call that the multi-national business was moving its EBITDA profitability target forward to the fourth quarter of 2020.
“2019 was a transformational year for Uber and I’m gratified by our progress, steadily delivering against the commitments we’ve made to our shareholders on our path to profitability,” Khosrowshahi said in the company statement to investors. “We recognize that the era of growth at all costs is over. In a world where investors increasingly demand not just growth, but profitable growth, we are well-positioned to win through continuous innovation, excellent execution, and the unrivaled scale of our global platform.”
Khosrowshahi said in his earnings calls: “We are challenging the team to get to profitability.”
He forecast the business to be profitable on an EBITDA basis (earnings before interest, taxes, depreciation and amortization) in the fourth quarter this year. Uber, which went public in May last year, has yet to make any money.
“We are confident we can reach long-term margins,” said Khosrowshahi, adding that Uber would eliminate “empty calories” in system inefficiencies.
The business founded in San Francisco in 2009, which is the most downloaded app globally in ridesharing and food delivery on both the Apple App Store and Google Play Store, posted a net loss of US$1.1 billion for the quarter, better than the US$1.2 billion it lost in the previous quarter and far better than the US$5.2 billion it lost in just three months representing the second quarter. Overall, Uber lost US$8.5 billion in 2019.
Uber’s revenues climbed 37% to US$4 billion.
“Our revenue growth continued to accelerate in Q4, with adjusted net revenue up 43% year-over-year in constant currency,” said Nelson Chai, CFO. “We consistently outperformed our adjusted EBITDA targets in 2019, including in the fourth quarter. Our focus on disciplined capital allocation is part and parcel to achieving our financial goals, and the recent sale of our India Eats business further demonstrates that commitment.”
Uber has made cuts expenditure. It sacked hundreds of employees at Uber Eats and in its marketing and recruiting departments in October last year. It has also sold businesses, including Uber Eats India.
Uber’s most profitable sector is Rides, which factors ride-sharing services and fees from drivers. It made US$13.51 billion in gross bookings, up 18% yet below the US$13.60 billion estimate among analysts polled by FactSet.
Uber attributed growth in Rides to ongoing global expansion, access to pick up and drop off passengers at airports across the world and higher-priced premium offerings for passengers like Uber Comfort, which uses vehicles with more head and legroom. However, it has lost its licence in London, the capital of England, and CNBC reported it is still struggling to comply with California’s groundbreaking new gig work law that makes it harder for the company to classify drivers as independent contractors.
Gross bookings from the Eats segment, including payments from restaurant and delivery partners, came in at US$4.37 billion, up 71% and above analysts’ US$4.13 billion estimate.
The company statement to investors showed it is still paying out a massive amount of money for what it calls “driver referrals and excess driver incentives” to drivers in its food and ridesharing businesses. Eats referrals and incentives for drivers cost the business US$1.13 billion in 2019, and US$319 million in Q4 alone, according to the filing. Rides driver referrals and excess driver incentives cost Uber US$123 million in 2019, with US$20 million of that in the fourth quarter.
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