Ubers first set of results as a publicly listed company were always going to be closely scrutinised, and its generally well known that IPO costs can act as a drag on the first set of numbers so expectations were always going to be on the low side for this latest set of numbers.
Optimism was also a little bit higher given the positive market reaction to Lyft’s numbers and which saw Uber’s share price finish the day over 7% higher, and well above its post IPO lows of $36.
Against these low expectations Uber (NYSE:UBER) still managed to disappoint on pretty much every level, posting an eye watering loss of $5.2bn for the quarter.
The company said that the size of the loss reflected the impact of its IPO in May, with $3.9bn in stock related expenses accounting for most of that. Given that the IPO raised $8bn that’s still a shockingly high number that hasn’t been recycled back into the business.
Quarterly revenues also came in below expectations, with the company reporting $2.87bn, below estimates of $3.05bn.
The business is certainly growing with monthly active users increasing from 91m at the end of last year to 99m, and the number of trips rising to 1.7bn. Gross bookings are expected to rise between 31-35% year on year, with margins also expected to improve quarter on quarter.
Uber Eats has also continued to grow well, it saw a rise in revenues last year of 149% to $1.5bn, and this growth continued in this latest quarter with a rise of 72% in revenues.
While encouraging, these are still very low numbers when set against an expectation that losses are still expected to be in the billions of US dollars in the years ahead.
CEO Dara Khosrowshahi said that he expected losses to peak this year and come in at about $3.2bn, and start declining thereafter. “In 2020, and 2021, you’ll see losses come down” he said.
While encouraging, I’d be even more worried if he said they weren’t going to come down, these levels of losses still don’t point to a particularly sustainable business model.
"DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.
No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. "