Uber shrinks net losses

Source: http://www.businessinsider.com/uber-shrinks-net-losses-2017-6
June 02, 2017 at 04:48PM

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Amid recent PR headwinds, Uber shared some seemingly positive news when it revealed its Q1 2017 results on Wednesday to The Wall Street Journal.

The ride-hailing company shrunk its net losses to $708 million from the previous quarter's $991 million, as revenue climbed 18% quarter-over-quarter (QoQ) to $3.4 billion. Gross bookings — which includes its ride-hailing service, UberEats, and the new Uber Freight — rose 9% QoQ to $7.5 billion. 

However, Uber’s total expenses still grew nearly 6% in Q1. Uber’s total expenses were about $4.1 billion in the first quarter, while it spent around $3.9 billion in Q4 2016. Uber is known for spending enormously on promotional activities to attract riders. In fact, in 2015, the company spent $1 million in a single week to subsidize rides for customers using UberPOOL in San Francisco. 

Uber’s latest efforts to capture additional revenue could help the company recoup some of its costs:

• The company has been experimenting with a new pricing method in several cities that uses machine-learning algorithms to predict the amount a customer is willing to pay for a given ride.
• Uber launched Uber Freight, which connects truckers with companies in need of freight services in Texas. Truckers can find shipments by sorting results based on their location, destination, deadline, and other factors. Although Uber hasn’t specified the cut it will take, brokerage services typically charge a 12-15% fee for this type of service.

But the company still needs to reign in spending if it wants to reach profitability soon. Uber’s growth seems to be slowing — the company reported QoQ growth of 74% in revenue and 28% in gross bookings in the final quarter of 2016, well above its Q1 growth rates. Even with additional revenue generators, if Uber’s expenses continue to inflate as growth in its core business moderates, the company may have difficulty reaching profitability. 

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