On-demand ride-sharing giant Uber Technologies Inc. saw its losses widen significantly in Q3 as the Silicon Valley industry pioneer doubles down on future growth opportunities such as electric scooters, bikes, logistics, and autonomous cars, as well as markets in India and the Middle East.
Losses Accelerate, Revenue Slows
Uber, one of 2019's most highly anticipated IPOs, posted a net loss of $1.07 billion in the most recent quarter, up roughly 20% quarter-over-quarter (QOQ). The firm reported $6.55 billion in cash on hand, not including the $500 million from Toyota Motor Corp. (TM) and its $2 billion debt offering. The firm has been voluntarily presenting income statements with stock-based compensation as it prepares to hit the public market sometime next year.
For the first time, Uber broke out specific numbers for Uber Eats, which accounted for $2.1 billion of $12.7 in overall gross bookings and saw a 150% gain YOY. In September, Uber said it was targeting an expansion of its food delivery platform to reach 70% of the U.S. population by the end of 2018.
The San Francisco-based transportation disruptor expected these losses as part of a larger strategy to diversify outside of its core ride-hailing business. CEO Dara Khosrowshahi expects Uber's bread and butter business to make up less than half of the company's overall sales in just 10 years, according to TechCrunch.
Uber's latest report may spook investors hoping for either an improvement in profitability or a jump in top line growth. Revenue at $2.95 billion in the quarter ended Sep. 30 reflects a growth rate of 5% QOQ and 38% over the year-ago period, roughly half of what the YOY growth rate was six months prior when the firm negotiated a $9.3 billion investment led by SoftBank Group Corp.
Lyft Poses Hurdle in Key Domestic Market
At the Wall Street Journal technology conference on Tuesday, Khosrowshahi defended Uber's ability to turn a profit, indicating that in some markets, Uber is generating a profit after taking into account local operations teams, drivers and other regional expenses, as noted by Bloomberg. In its domestic market, however, the CEO says Uber is in "a big battle" with Lyft.
Khosrowshahi has said publicly that Uber is targeting an IPO for the second half of 2019, yet Bloomberg cites people familiar with the matter who indicate he's aiming for the first half of next year. Some are valuing the company as high as $120 billion, almost double its last reported private valuation at $62 billion.
“We had another strong quarter for a business of our size and global scope,” said Uber's Chief Financial Officer Nelson Chai in a statement. “As we look ahead to an IPO and beyond, we are investing in future growth across our platform, including in food, freight, electric bikes and scooters, and high-potential markets in India and the Middle East where we continue to solidify our leadership position.”
Lyft, Uber's main competitor in its largest market, is also considering an IPO in 2019.