Uber recently announced it loss $708 million in the first quarter of 2017. However, for some investors the financial results from the first quarter qualify as good news for the company. Uber reported a $991 million loss in the previous quarter.
The ride sharing company’s revenue is generated by taking a cut of a divers’s fares; on average 25 percent. Ubers gross bookings, which includes UberEats and Uber Freight, rose 8.7 percent to $7.5 billion at the end of the quarter.
“These results demonstrate that our business remains healthy and resilient as we focus on improving our culture, management and relationship with drivers. The narrowing of out losses in the first quarter puts us on a good trajectory towards profitability,” an Uber spokesman wrote in a statement.
The company, which managed to raise roughly $15 billion in equity and debt funding, also recently confirmed they were still sitting on $7.2 billion in cash, about the same amount they held at the end of 2016.
Since Uber is a private company, they have no obligation to disclose its finances. This year Uber begun to disclose selective data and provide a narrative that portrays a company that has started to reign in the amount of cash lost on a quarterly basis, leaving the door to go to an Initial Public Offering (IPO) open. Some were disappointed that some numbers were not released; such as the details on its overall ridership growth and expenses not factored into their quarterly report.
“There are many companies, Amazon as an example, that invest heavily in the early years and hit profitably only after a company IPO. I have no idea if this is Uber;’s strategy, but it could be,” early Uber investor Mike Walsh told CNN.
Uber lost a total of $2.8 billion last year while ramping up its expansion efforts around the world. The company has cited various reasons for the losses. One reason stems from the money Uber is required to spend in order to enter markets where taxis have a monopoly.
It’s argued that by aggressively spending now, Uber will be able to beat out competitors on pricing and invest heavily in projects. Uber has been caught in legal battles in various cities throughout Canada, and has burned through cash fighting regulators and drivers in court in an attempt to preserve a business model that relies on independent contractors; who don’t receive employee benefits or compensation for fuel, vehicle maintenance and other expenses that come with the job.
The company’s head of finance Gautam Gupta also recently announced his departure from the company. While at Uber Gupta cited another major cost factor being the amount of money Uber pays to drivers. Documents published have shown the company has paid $2.72 billion to drivers in 2015.
The company recently announced their search for Chief Financial Officer, preferably one with experience in leading a public company’s financial operations. Whomever, they will need to be able to maintain Uber’s increasing growth while containing the losses.
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