Dara Khosrowshahi, the new CEO of Uber, is on the right path to driving Uber to profitability. Despite recording a substantial loss of $4.5 billion in the latest leaked financial records for the 4th quarter of 2017, the company achieved a 61 percent increase in adjusted net revenue from the same period in 2016.
Uber isn’t publicly traded but has chosen to make selected financial information available to the public and investors in recent quarters. The ride-hailing giants and most valuable U.S. private technology company showed growth in sales in this latest financial report for the fourth quarter. Apart from the significant growth in sales to $7.5 billion, the San Francisco-based firm reduced its fourth-quarter loss by 26 percent to $1.1 billion, compared with the third quarter, the company told its investors on a conference call on Tuesday and disclosed it exclusively to The Information. Also, a 14 percent higher revenue of $11.1 billion, according to Uber, was as a result of better controlling costs like advertising and customer support.
Khosrowshahi said on the conference call to investors that UberEats had reached a $4 billion gross revenue run-rate in the fourth quarter, which means food delivery will represent about 10 percent of Uber’s business. In the midst of the heavy losses and turbulent 2017 that the company faced; where the co-founder Travis Kalanick was forced to resign in June amid pressures from investors — the new CEO has been able to steady the ship and grow the company.
Last month, SoftBank Group Corp. completed a $9.3 billion investment deal to make itself the largest shareholder in the ride-services company. The Japanese conglomerate who became the largest shareholder after the deal believes that people would rather book rides through an app instead of driving themselves and that the business will find a way to make up for losses today.
Bill Gurley, a former board member who helped lead the ouster of Khosrowshahi’s predecessor, Travis Kalanick, spoke to Bloomberg on Wednesday at the Goldman Sachs Group Inc. technology conference in San Francisco about his optimism on the profitability of the company over time. “I’m very optimistic. We have a great team on board that knows how to run profitable companies. It will take some time,” said Bill Gurley. In the interview, he also pointed out the “strong profit drivers” for Uber, stating the high-end market and majorly the UberEats, which represents about 10 percent of Uber’s business.
The CEO has also expressed the desire to go public with the company in 2019 in order to enjoy the “advantages of being a public company.” In recent history, Khosrowshahi then CEO of Expedia, recorded more than 500 percent increase in stock price since he took over of Expedia Inc. as President and CEO in 2005. It reached a high of $159.50 in late July of 2017. This evidently shows he has what it takes to run a public company, which is one of the major reasons for the optimism.
Considering the fact that Uber is a private company, one cannot help but wonder why the company keeps releasing its financial records to the public, putting itself under unnecessary media scrutiny. Could this be a subtle way of getting the public’s attention and interest in preparation for its Initial Public Offering (IPO) in 2019?
AUTHOR: Feranmi Akeredolu
Credits: Venture Africa