Uber loses $1 billion in quarterly costs, growing for the drivers, food delivery

SAN FRANCISCO/BENGALURU (Reuters) – Uber Technologies Inc. reported a $1 billion loss on Thursday as the ride-hailing service spends heavily to build up its food delivery and freight companies, sending a turnover of 20% in the first quarter report as a public company.

Sales of $3.1 billion adjusted at the high end of the range, Uber weather forecast for the quarter and loss of $1.0 billion in comparison with the forecast of $1.0 billion to $1.11 billion.

Shares rose 2.6% after a conference call with executives in which Chief Executive Dara Khosrowshahi cited business improvements, such as less consumer promotions in the second quarter, but in 2019, an “investment year.”

With the price of its shares trading more than 10% below the IPO price of $45, Khosrowshahi will have to convince investors Uber can turn a profit, given its reliance on the rider incentives and competition in all parts of the business, from the core business of the trip comes from food delivery to freight.

“Our story is simple. We are the global player,” Khosrowshahi told analysts in his first earnings call after the company’s IPO earlier this month. “Our task is to grow in size and efficient for a long, long time.”

The results of the new public company was able to hit its own financial targets, the opportunity to offer some security for investors.

Costs went from 35% in the quarter, as the company spent heavily in the run-up to the IPO earlier this month. Gross bookings, a measure of the total value of the trips for the driver and other costs, increased from 34% a year ago to $14.6 billion. Bookings were up 3.4% from the previous quarter, with the difficulty of recruiting new riders in the saturated markets.

But Wedbush analyst Ygal Arounian said he was encouraged by the improvements in the rates and accelerate revenue growth. Uber take rate is the turnover increased by the company after the deduction of the driver or the restaurant to pay and incentives.

FILE PHOTO: Logo of the Uber is seen on a smartphone screen, as an image of stock exchange graph displayed on a computer screen in this illustration picture May 7, 2019. REUTERS/Kacper Pempel/Illustration

“We are still a while away from profitability, but Uber expects strong signs of improvement across many of the important data and that is an important sign for investors.”

Uber was the largest of a group of Silicon Valley start-ups, which the public road this year, against the background of a global stock market sell-off sparked by renewed trade tensions between the United States and China. Uber is also facing increasing regulation in different countries, and the fighting with the drivers about the wages.

In the mature AMERICAN market, where Uber’s main rival is Lyft Inc, Khosrowshahi said two drivers for growth were the expansion of the rides in the suburbs and a generation of golf, in which millennials show little interest in car ownership.

Executives said signals from Lyft during the recent transcript that his rival was focused less on price and more on brand and product was a positive one. Khosrowshahi called it a “healthier way of competing than just throwing money at a challenge.”

General, premiums paid to directors more than doubled from a year earlier, faster than the growth of the turnover of the company invested in the growing food delivery service, Uber Eats. In that device, driver, incentives have tripled to $291 million, while sales increased by 89 percent.

Uber was “very early in the stages of operation of how ride-hailing can help Eat business, where take rates would improve in 2019, he said.

The company was started to “upsell” riders to Eat deals, with the encouragement of the first signs, Khosrowshahi said.

Uber said its monthly active users rose to 93 million worldwide, of 91 million euros at the end of the fourth quarter.

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A net loss of $1.01 billion, or $2.26 per share, in the first quarter ended March 31, compared with a net income of $3.75 billion, or $1.84 per share, a year earlier, when results were helped by the sale of the operations to Seize and Yandex.

In the fourth quarter, Uber net loss of $887 million and the revenue was $2.97 billion.

Uber previously said that it expected in the first quarter sales in the range of $3.04 billion to $3.1 billion, while seven analysts polled by Refinitiv IBES on the average expected revenue of $ 3.04 billion.

Reporting by Alexandria Sage in San Francisco and Arjuna Panchadar in Bengaluru; Editing by Lisa Shumaker

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