Uber forecasts first-ever quarterly profit by end of year

The Uber Technologies Inc. application is displayed in the App Store on an Apple Inc. iPhone in an arranged photograph taken in Arlington, Virginia, U.S. on Monday, April 29, 2019. Photographer: Andrew Harrer/Bloomberg

Uber Technologies Inc. said it will deliver a first-ever quarterly profit by the end of the year, signaling that cost-cutting measures are exceeding even the company’s own recent expectations.

The company will become profitable, on an adjusted basis, by the fourth quarter of 2020, Dara Khosrowshahi, the chief executive officer, said on a conference call to discuss financial results Thursday. A previous plan set this goal for 2021. The stock was up about 5% in extended trading.

The drive toward profitability is likely to take a toll on growth. Nelson Chai, the chief financial officer, said gross bookings will decline slightly in the first quarter from the previous period.

For the fourth quarter, Uber edged out Wall Street’s expectations, with bookings up 28% and a loss that was narrower than analysts’ estimates. Gross bookings for the fourth quarter were $18.1 billion, showing demand for transportation and food delivery orders remains strong. The measure, which represents the total value of rides, food orders and other businesses, is closely watched by investors.

Efforts to rein in spending is proving to be especially effective. The San Francisco-based company reported an adjusted loss of $615 million, compared with a $713 million average of analysts’ estimates compiled by Bloomberg. The loss, which excludes interest, taxes and other expenses, was $817 million in the same quarter a year earlier.

Uber is trying to more closely connect its various services and increase usage among the more than 100 million customers who open the app each month. The company is investing in electric bicycle and scooter rentals and experimenting with helicopter rides and temporary staffing.

The new businesses are pricey, though, and investors have punished the company for burning cash to fuel growth. The stock, which went public in May, trades below its initial offering price. Uber said Thursday that its loss for the year using generally accepted accounting principles was $8.51 billion. The startling figure was driven primarily by stock compensation and one-time costs associated with the IPO.

In the last year, Uber has taken steps to check its spending habits. It reduced marketing expenses, cut more than 1,000 employees and abandoned some unprofitable food delivery units. It ended delivery in South Korea and sold the delivery operation in India last month.

The ride-hailing business was profitable on a standalone basis in the fourth quarter, Uber said. The company lost $130 million on its “other technology programs,” including the autonomous driving division, which is funded by Uber, SoftBank Group Corp., Toyota Motor Corp. and others.

Uber didn’t disclose the amount it spent battling government initiatives, like California’s Assembly Bill 5, a new law that seeks to reclassify gig economy workers as employees. Regulators in Colombia, London and parts of Canada have all moved to ban the service from operating, and Uber, in most cases, is appealing those decisions. The U.S. and Canada accounted for most of Uber’s revenue in the fourth quarter.

Bloomberg

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.