Global ride hailing company, Uber, has recorded a loss of $1.01 billion for the first quarter of 2019 in what was the company’s first financial report as a public company. This loss is among the largest of any public company.
However, the company’s revenues were up by almost 20% from the same time last year (when it made $2.58 billion in revenue) as it made $3.1 billion which was better than the expected $3.04 billion it had forecast for the quarter.
According to the reports, Uber’s total gross booking rose 34% to $14.6 billion. And it also grew its monthly active platform consumers 33% from last year’s quarter to 93 million.
Gross bookings are the entire money collected by Uber with the exception of the driver tips. This is before it pays taxes, tolls, fees, wages to drivers, and restaurants.
While overall revenues grew 20%, it’s core business, ride-hailing, happened to grow slower than its other segments. Ride-hailing revenue grew only 9% overall. For ride hailing, revenues grew 26% in the U.S. and Canada to $1.8 billion. 26% in Europe, the Middle East and Africa to $487 million, 6% in Asia to $267 million, and fell by 13% in Latin America to $450 million.
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Meanwhile, Uber Eats continues to grow rapidly as revenue shot up 89% while its gross bookings grew 108%.
Although having a massive $1.01 billion loss, it fell within the range of what the company had predicted when they initially went public earlier this month. In its IPO documents, the company had expected first-quarter losses to fall between $1 billion and $1.1 billion.
The reason for this loss is because of the huge money the company spends on rider promotions and driver incentives to gain market share – one reason the company has struggled to reach profitability. With intense competition from other ride-hailing startups, the company has to make its driver wages competitive.
In addition to that, the company has been spending a lot on the expansion of its Uber Eats service to more areas. This means it has to spend more on paying the drivers and the restaurants. Also, the development of its self-driving cars has had a cash draining effect on the company.
“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 17 million trips per day and an annualized gross bookings run-rate of $59 billion.”
Dara Khosrowshahi, CEO, Uber.
Moving forward, the company will be cutting back on customer promotions and that would mean that marketing expenses would decline in this second quarter.
