Uber loses $5 billion, misses Wall Street targets despite easing price war

Uber Technologies Inc reported a $5.2 billion loss and revenue that fell short of Wall Street targets on Thursday as growth in its core ride-hailing business slowed, sending its shares down 6%.

Uber's net loss, up from a loss of $878 million a year earlier, reflected $3.9 billion of stock-based compensation expenses related to its IPO earlier this year, and Wedbush analyst Ygal Arounian said its loss before interest, tax, depreciation and amortization was in line with Wall Street targets.

Still, he said, "So far, mostly everything is below expectations."

The figures caught investors off guard because smaller rival Lyft Inc on Wednesday had raised revenue expectations and described an easing price war, sending up shares of both companies during regular trade on Thursday.

Uber shares fell 5% after hours on Thursday and Lyft dropped about half a percent. Uber had risen more than 8% and Lyft had gained 3% during the day.

Uber reported that revenue growth slowed to 14%, and the company's core business, ride-hailing, grew revenue only 2% to $2.3 billion. If not for a 72% rise in revenue from food delivery unit Uber Eats, revenue would have dropped. Total revenue fell short of the average analyst estimate of $3.36 billion, according to IBES data from Refinitiv.

Gross bookings, a measure of total value of car rides, scooter and bicycle trips, food deliveries and other services before payments to drivers, restaurants and other expenses, rose 31% from a year earlier to $15.76 billion. Analysts on average were expecting $15.80 billion.

At the same time, Uber is keeping less money per car ride. The amount passengers spent on trips rose 20% while the amount Uber kept after paying its drivers increased just 4%.

Chief Executive Officer Dara Khosrowshahi said in a press call the competitive environment is starting to rationalize and it has been "progressively improving" since the first quarter.

Lyft on Wednesday said pricing had become "more rational", meaning the company should spend less on promotions and incentives to win market share. It raised its revenue outlook on Wednesday.

Uber's Khosrowshahi said the company is making its decision separate from Lyft.

Both the companies have historically relied on subsidization to attract riders and have been spending heavily to expand services into areas such as self-driving technology for Lyft and food delivery for Uber.

Uber's costs rose 147% to $8.65 billion in the quarter, including a sharp rise in spending for research and development.

"While we will continue to invest aggressively in growth, we also want it to be healthy growth, and this quarter we made good progress in that direction," Chief Financial Officer Nelson Chai said in a statement.

The company, which has not yet made clear whether it will make a profit, is trying to convince investors that growth will come not only from its ride services, but also from other logistics and food delivery services.

Uber said its monthly active users rose to 99 million globally, from 93 million at the end of the first quarter and 76 million a year earlier.

source: news.abs-cbn.com

Uber China closes $1-B fundraising round: sources

BEIJING/SHANGHAI - Uber Technologies Inc's China arm has closed its $1 billion fundraising round early, according to two people with knowledge of the matter, with investors still hopeful for the U.S.-based ride service despite strong domestic competition.

Investors in Uber's Chinese unit include Internet giant Baidu Inc, China CITIC Bank Corp Ltd and China Life Insurance Co Ltd, among others, said one of the people, requesting anonymity because they were not authorized to discuss the matter publicly.

Chinese financial conglomerate Ping An Group's investment arm and Hillhouse Capital, which has a stake in the main U.S.-based Uber business, also took part, the person said.

However, a representative of Ping An's investment team said they did not invest in the China unit. Hillhouse was also not an investor, said a third source who declined to be identified because of the sensitivity of the subject.

A spokeswoman for Uber declined to comment.

With the close of the $1 billion round, Uber is re-lining its war chest for a drawn-out battle with Chinese car-hailing app rival Didi Kuaidi, which last month raised $2 billion.

The two are locked in a turf war, spending heavily on subsidies to lower the cost for users and inflate the money earned for drivers of their services.

The deal was oversubscribed, said the second source directly familiar with the fundraising. According to a fundraising document seen by Reuters last week, this round values Uber China at $7 billion, with the unit planning to list on the mainland by 2020.

source: www.abs-cbnnews.com

Uber launches car leasing unit

SAN FRANCISCO - Uber Technologies has launched its own auto leasing subsidiary in an effort to sign up more drivers, injecting the fast-growing ride services company directly into the financial services sector for the first time.

The move by Uber, announced as a pilot project on Wednesday, follows the end of its partnership with Banco Santander's U.S. lending unit earlier this year.

Uber announced the initiative but disclosed few financial details, though it said it would offer both new and used cars.

Uber launched a program in November 2013 to arrange manufacturer discounts and lenders for prospective drivers who lacked cars in the hopes it would boost vehicles driving for the app-based service.

At the time, Uber said it hoped to finance 100,000 drivers. Nearly 20,000 drivers have participated in the program so far, Uber said.

Santander Consumer USA Holdings declined to comment last week on why the Uber leasing deal ended. Uber continues to partner with other lenders for car purchases.

Andrew Chapin, head of vehicle solutions for Uber, this week said Uber wants to provide drivers with more flexibility than traditional leasing companies can offer. Participants in Uber's program can return their vehicle with two weeks notice and "limited additional costs," the company said.

One of the fastest-growing sharing-economy companies, Uber operates in 57 countries, with an estimated value of more than $40 billion. It has also tangled with transportation authorities across the globe, along with attorneys seeking to deem Uber drivers employees entitled to benefits.

Uber's entry into auto leasing brings it into contact with yet another set of regulators in a controversial business. The U.S. Consumer Financial Protection Bureau last month said it would oversee non-bank auto lenders who process at least 10,000 loans or leases per year.

The CFPB said it seeks to ensure such leases are marketed accurately, and that debt collectors operate fairly.

Santander has been criticized for its subprime auto loan business. The company disclosed a civil subpoena from the U.S. Department of Justice and other regulatory agencies for documents related to underwriting and securitization of such loans.

Uber's leases will be held on the subsidiary's books during the pilot program, Chapin said, but that will change longer term. The company itself will not be a party to any lease between a driver and the subsidiary, so any change in driver rates would not alter the terms of a lease.

source: www.abs-cbnnews.com

UberX ride-sharing service is now free in Seoul

SEOUL - U.S. taxi service provider Uber Technologies Inc on Wednesday said it will make its low-cost uberX ride-sharing service available free of charge in Seoul, in its second bid this month to operate legally in South Korea.

Uber started charging a fee last year for the taxi-like service, which matches passengers via a smartphone app with private drivers who do not hold commercial transport licenses.

Prosecutors subsequently indicted Uber's chief executive, Travis Kalanick, as well as its South Korean unit for violating a law prohibiting individuals or firms without proper commercial licenses from providing or facilitating transportation services.

"We want to actively work towards a consensus, and the first step to that process is switching off the fare," Uber's head of north Asia Allen Penn said in a statement.

Uber proposed a new registration system for its drivers in South Korea earlier this month in a bid to operate legally. But the transport ministry rejected the proposal and said it would stop the company offering its services.

Uber has been the subject of similar regulatory ire in countries around the world, even as it expanded into more than 290 cities.

In January, the city of Seoul declared Uber's services illegal and started offering rewards of up to 1 million won ($911) for people who reported private drivers providing transport through the company.

Yang Wan-soon, director of the Seoul city government's taxi and logistics division, told Reuters it is up to the courts to decide whether Uber can operate legally.

"The city also needs to consider whether the free taxi service would disrupt existing market order," Yang said.

source: www.abs-cbnnews.com