Uber's revenue growth slows as profit remains elusive

Uber Technologies Inc. booked $ 50 billion in bookings for its transportation and food delivery businesses last year, a testament to the company's global size and reach as it prepares to seduce investors in one of the largest lists of public securities so far.

The figures released by the company on Friday showed that business turnover grew only 2% in the fourth quarter, a sign that Uber continued to heavily subsidize races in competitive markets, raising questions about its future growth prospects.

The Uber business figure for the year 2018 is set at $ 11.3 billion, an increase of 43% over the previous year. Its pre-tax, amortization and other losses were $ 1.8 billion, an improvement over the $ 2.2 billion loss recorded in 2017.

Uber has highlighted the annual number of bookings, up 45% from 2017, in its Friday publication of a few figures selected for its fourth-quarter and year-end results, a practice that it had been for several quarters, as planned to go in public. Annual figures are particularly important to show potential investors the company's trajectory, as opposed to Uber's more erratic quarterly results.

In December, Uber filed in confidence a public call for savings, which could be effective as early as the second quarter of this year. He runs side by side with his rival Lyft to become the first IPO.

"Last year was our best year and the fourth quarter set another record," said Uber Chief Financial Officer, Nelson Chai, in a statement.

Uber said gross bookings for the fourth quarter were a record $ 14.2 billion, up 11% from the previous quarter.

This marks an improvement after slowing growth in bookings, which only reached single-digit percentages during most of last year.

Uber business turnover in the fourth quarter reached $ 3 billion, up 2% from the third quarter and 24% over the previous year.

INTENSE COMPETITION
The food delivery service, Uber Eats, accounts for more than $ 2.5 billion in quarterly bookings, according to one knowledgeable person. Uber has proclaimed Uber Eats as the largest online food distribution company outside of China.

Uber has to convince investors in the public markets that its market share, growth trajectory, global reach and diversity of business make it an attractive investment, despite its huge losses.

"Uber needs to show that it can control costs and generate revenue.It is actually providing a strong argument to badert that its business model is not broken and that it can reach and maintain its profitability." despite the problems with drivers, customers and politicians, "said David Brophy, a professor of finance at the Ross School of Business at the University of Michigan.

The fierce competition around the world has kept Uber in the red. Rivalries in India with Ola's transportation service, in Latin America with Didi Chuxing and in the Middle East with Careem lobbied Uber for it to lower prices, increase driver commissions and invest heavily in marketing and advertising. recruitment. Uber has been talking with Careem since the middle of last year about a possible merger, but the companies have not reached an agreement.

Uber Eats is also facing a crowded food distribution sector, forcing it to adopt a discount tactic to compete with companies such as DoorDash, a start-up food distribution company, is in the process of Collect $ 500 million from investors with a Postmates delivery company, which has requested an IPO this month.

Uber does not intend to slow down its investments in Uber Eats or in other expensive areas, such as the development of autonomous cars, in order to generate profits in the near future. The Company's losses before interest, income taxes, depreciation and amortization amounted to $ 940 million in the fourth quarter, an increase of 43% over the previous quarter and 21% over 2017.

"I think investors will forget even higher losses in the fourth quarter if evidence of significant revenue growth is observed," said Arun Sundararajan, a business professor at the Stern School of Business. from the University of New York.

But, he said, Uber's activities still account for only a fraction of global consumer spending on transportation, and "evidence that Uber is making a significant contribution to the economy." behavior change "is essential to its long-term success.

© Thomson Reuters 2019

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