In March, Uber will turn 10 years old. On paper, it’s one of the world’s most highly valued companies. Uber has become a verb for rides on demand, changed the transportation habits of millions and pushed changes in city planning around the world—But after a decade of operation and perhaps a year or so away from its initial public offering, an essential unanswered question remains: Is Uber viable?
Put aside questions about whether Uber is overvalued, or whatever other clouds exist. I’m talking about simple dollars and cents. Uber Technologies Inc. has burned through more than $1 billion in cash in the last year, by design, and continues to fund itself with the huge capital pools available for young superstar companies since about 2010. If all that cash from SoftBank, Saudi Arabian oil wealth, conventional tech investment funds — or even cash from future public stockholders — unexpectedly dries up, does Uber’s business model work? I don’t know, and almost no one else does either. There are always questions about whether relatively young companies will have staying power, but because Uber has never had to finance itself solely with the cash generated by its businesses, questions about the company’s basic viability are even now more urgent.
Nearly a year into Uber’s CEO Dara Khosrowshahi tenure, Uber reported it’s financials and according to this report by CNBC, they had a second-quarter loss of $891 million. While it’s a 16 percent improvement from a year earlier, the loss follows a rare profit posted in the first quarter, thanks largely to the sale of overseas assets—Even after increased spending last quarter, revenue growth is slowing. Sales rose 63 percent to $2.8 billion in the second quarter compared with the same period last year. The rate in the first quarter was 70 percent—The company generated $2.7 billion in net revenue, up 51% from the same quarter last year. Gross bookings were $12 billion, an increase of 41% year-over-year. —The company’s revenue and bookings growth dropped off slightly since Q1.
Khosrowshahi is pouring large, undisclosed sums of money into food delivery, logistics and autonomous-car technology. The San Francisco-based company has said the food delivery business, Ubereats, represents more than 10 percent of its gross bookings. Growth in that segment may be masking a slowdown in Uber’s main business—that Uber is spending $125 million to $200 million a quarter on self-driving cars, and the company has fielded calls from investors to sell the unit.
“We had another great quarter, continuing to grow at an impressive rate for a business of our scale,” Uber CEO Dara Khosrowshahi said in a statement. “Going forward, we’re deliberately investing in the future of our platform: big bets like Uber Eats; congestion and environmentally friendly modes of transport like Express Pool, e-bikes and scooters; emerging businesses like Freight; and high-potential markets in the Middle East and India where we are cementing our leadership position.”
The company is privately held but chooses to release some quarterly financial details to its large body of investors and to the public—is targeting an initial public offering in the second half of next year, but it still doesn’t have a chief financial officer after years of searching.