Uber lost more than $1bn in the first three months of the year, the ride-sharing company announced on Thursday.
Releasing its first quarterly report since it became a public company, Uber said it now had 93 million customers who are active on a monthly basis, 33% higher than the same period last year. The company’s revenues were $3.1bn for the three months, 20% higher but slower than the 25% annual growth Uber recorded in the prior quarter.
The results were broadly in line with analysts’ expectations.
The company is spending heavily as it attempts to grow its market and head off rivals including Lyft, which is also losing billions. Investors – and even the company – have worried that Uber may never make a profit.
Uber had clearly signaled to investors that its losses would be large over the quarter ahead of its poorly received share sale on 10 May. Uber’s shares rose marginally in after-hours trading but are still well below the initial price it set for the share sale earlier this month.
“Earlier this month we took the important step of becoming a public company, and we are now focused on executing our strategy to become a one-stop shop for local transportation and commerce. In the first quarter, engagement across our platform was higher than ever, with an average of 17m trips per day and an annualized gross bookings run-rate of $59bn,” said Dara Khosrowshahi, Uber’s chief executive officer.
Uber is expanding into food delivery, Uber Eats, and freight, Uber Freight, but faces stiff competition in those areas too. At the same time ride-sharing companies are under pressure to increase wages for drivers, who have gone on strike in many cities complaining of poverty wages.
Uber’s hotly anticipated share sale got off to a miserable start. Wall Street investors seemed less than enamored of the company’s years of huge losses and Uber was forced to cut the price of its initial public offering (IPO) before going public on 10 May.
The IPO itself stalled with Uber’s shares recording the largest ever first day loss for a US company – $655m. Its share price has recovered somewhat in recent weeks and on Thursday ended the day at $39.76, though still well below their $45 IPO price.
Uber’s difficult debut had been foreshadowed by its rival, Lyft. Lyft went public at $72 a share in April, and the shares are now valued at $54.83. It too has investors worried that its huge losses may never translate into profits.
The two companies are among a batch of so-called “unicorns” – private companies valued at more than $1bn – that have attracted major investment from Silicon Valley backers and had hoped to make a splash on Wall Street.
Other loss-making unicorns including WeWork – the co-working office rental company that lost close to $2bn last year – are also planning IPOs in the near future.
Alyssa Altman, transportation lead at digital consultancy Publicis Sapient, said: “Uber has an easy-to-use app, a fleet of drivers and vast quantities of data, but its rise has been fueled by its investor’s willingness to subsidize the taxi rides that make up the bulk of the business. Last year 5.2 billion people rode an Uber. In each of those trips, the company lost an average of 58 cents. Uber continues to grow, and it’s fair to say it dominates the taxi-hailing market, but the company’s success is built on sand. The reality is that it still hasn’t made a profit.”