Uber Loses $1.16 Billion in Q3 But Insists Profitability is on the Way

November 11, 2019 9:34 am Published by
For Uber Technologies Inc., financial progress all depends on your point of view. For instance, for the company’s third quarter earnings, its $1.16 billion loss is not necessarily a negative result, according to Uber, which says, the net loss, including $401 million in stock-based compensation expenses, actually improved quarter-over-quarter because revenue grew by $647 million. That revenue is mainly attributed to a 31 percent increase in rides and a 29 percent increase in gross bookings. Overall company revenue grew by 30 percent, compared to 14 percent growth in the second quarter. However, from another point of view, if EBITDA is excluded, the loss grew, on an adjusted basis to $585 million, compared with a loss of $458 million in the year-earlier quarter.

Uber’s CEO, Dara Khosrowshahi certainly takes the positive view, “Our results this quarter decisively demonstrate the growing profitability of our Rides segment. Rides Adjusted EBITDA is up 52 percent 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.”

While Uber’s Rides division improved noticeably, there is concern that the Eats unit is in tough with a list of competitors fighting for market share. While Eats revenue grew by 64 percent, the division still registered a 67 percent drop in EBITDA during Q3 to $316,000 million. Uber Eats isn’t the only food delivery company struggling in that sector. GrubHub Inc.’s stock took a tumble of more than 43 percent last week after the company pointed out the increasing competition and growing lack of loyalty by customers who are using a variety of delivery services. As Uber’s Khosrowshahi explained, “In every market, we have two, three, four or five competitors out there.”

For Uber, the uncertainty of future profitability has taken a toll on share price which is down by 30 percent from its IPO valuation of $45. In morning trading today, the price is down by more than 6 percent.

For further reading, click onto the links below: