REUTERS: Uber Technologies Inc reported a record US$5.2 billion loss and revenue that fell short of Wall Street targets on Thursday as growth in its core ride-hailing business slowed, sending its shares down 6per cent.
The company said a price war in the United States was easing and that an important measure of profitability topped its target, but slowing revenue growth raised questions about Uber's ability to expand and fend off competition.
"Losses are widening and the competition is cut-throat," said Haris Anwar, analyst at financial markets platform Investing.com. "What's sapping investor confidence and hitting its stock hard after this report is the absence of a clear path to grow revenue and cut costs."
Uber's second-quarter net loss, widening from a loss of US$878 million a year earlier, included US$3.9 billion of stock-based compensation expenses related to its IPO earlier this year and nearly US$300 million in "driver appreciation" related to the stock sale.
The report caught investors off guard in part because Uber's smaller rival Lyft Inc on Wednesday had raised revenue expectations and described an easing price war.
Uber stock had risen more than 8per cent and Lyft had gained 3per cent during the day. Following Uber's report, its shares fell 6per cent and Lyft dropped nearly 2per cent.
Uber reported that revenue growth slowed to 14per cent to US$3.2 billion and fell short of the average analyst estimate of US$3.36 billion, according to IBES data from Refinitiv. The company's core business, ride-hailing, grew revenue only 2per cent to US$2.3 billion. Food delivery Uber Eats grew 72per cent to US$595 million.
Gross bookings, a measure of total value of car rides, scooter and bicycle trips, food deliveries and other services before payments to drivers, restaurants and other expenses, rose 31per cent from a year earlier to US$15.76 billion. Analysts on average were expecting US$15.80 billion.
At the same time, Uber is keeping less money per car ride. The amount passengers spent on trips rose 20per cent while the amount Uber kept after paying its drivers increased just 4per cent.
Chief Executive Officer Dara Khosrowshahi said in a press call the competitive environment was starting to rationalize and had been "progressively improving" since the first quarter.
This year would be the peak for investment and losses would lessen in 2020 and 2021, he said.
Lyft on Wednesday said pricing had become "more rational", meaning the company should spend less on promotions and incentives to win market share. It raised its revenue outlook.
Both the companies have historically relied on subsidization to attract riders and have been spending heavily to expand services into areas such as self-driving technology for Lyft and food delivery for Uber.
Uber's costs rose 147per cent to US$8.65 billion in the quarter, including a sharp rise in spending for research and development.
"While we will continue to invest aggressively in growth, we also want it to be healthy growth, and this quarter we made good progress in that direction," Chief Financial Officer Nelson Chai said in a statement.
The adjusted loss before items including interest, tax, and stock-based compensation more than doubled to US$656 million but was better than the company expected, Uber said. It also topped Wall Street targets of a US$996 million loss.
Gross bookings for the year would be US$65 billion to US$67 billion, it said, in line with Wall Street's target of US$65.9 billion.
The company, which has not yet made clear whether it will make a profit, is trying to convince investors that growth will come not only from its ride services, but also from other logistics and food delivery services.
Uber said its monthly active users rose to 99 million globally, from 93 million at the end of the first quarter and 76 million a year earlier.
(Reporting by Vibhuti Sharma in Bengaluru and Alexandria Sage in San Francisco; Editing by Arun Koyyur, Peter Henderson and Lisa Shumaker)