Uber said Thursday it lost more than $1 billion in the first three months of 2019, in the latest sign that the company has a long and uncertain road ahead to profitability.
The ride-hailing company lost $1.01 billion in the first quarter, compared to a rare profit of $3.75 billion in the same period a year ago, which was fueled by its decision to cede two of its operations abroad to rivals.
It was the first time Uber (UBER) reported earnings results since going public earlier this month. Uber (UBER)’s long awaited Wall Street debut quickly turned into a debacle as the company opened on its first day of trading at $42 a share — below its IPO price of $45.
Ahead of the earnings report on Thursday, Uber stock was trading around the $40 mark, or 11% below its IPO price. Uber stock ticked up 4% in after-hours trading Thursday following the earnings report.
For the better part of a decade, Uber raised unprecedented sums of capital from venture capitalists, celebrities and Saudi Arabia to bulldoze into markets around the world.
Now, the company faces an uphill battle to win over Wall Street investors concerned about its history of steep losses and slowing revenue growth, not to mention broader market jitters over the escalating trade war between the United States and China.
“While I’m proud of what we achieved with our IPO, I’ve told our team that it’s ultimately just one moment in a much longer journey,” Dara Khosrowshahi, Uber’s CEO, said on a conference call with analysts Thursday after the earnings report.
Uber posted revenue of $3.1 billion for the first quarter, up 20% from the year prior — that is strong sales growth by some standards, but not the rocket ship growth that investors may expect from a newly public technology company.
The company’s ridesharing revenue — its core business — grew just 9% from the year prior. Other newer segments are growing faster, however. Uber Eats, its meal delivery service, saw its revenue nearly double.
Khosrowshahi said Uber feels good about its competitive position in the meal-delivery market, but he admitted it is a difficult space. “It is challenging,” he said. “There are many players that are well-funded, that are well-operated and they are competing to win.”
Uber spends heavily on marketing and subsidizing the cost of rides. It also makes investments in newer services such as food delivery, freight shipping, electric bikes and scooters.
Lyft (LYFT), Uber’s chief US rival, is also deep in the red and struggling to win over public market investors. Lyft (LYFT) reported losing $1.14 billion in the first three months of the year, primarily due to stock-based compensation and other expenses connected to its initial public offering.
Earlier this month, Lyft CFO Brian Roberts stressed that the company sees “a path to profitability” in its core ride-sharing business and expects that 2019 will be its “peak loss year.” Lyft executives also claimed the ride-hailing industry is becoming more “rational,” with more emphasis on winning over customers through experience and the power of the brand, rather than through subsidized rides
On the conference call Thursday, Khosrowshahi referenced those remarks as a positive sign for the industry. “I think competing more on brand and product is … a healthier mode of competition than just throwing money at a challenge,” he said.
Given investor concerns about how much money both companies are losing, Wall Street would likely agree with that sentiment.