Economy

Uber shares skid as quarterly loss soars

Uber shares skid as quarterly loss soars

Uber continued to spend heavily on sales and marketing, which includes costly promotions created to attract riders and drivers.

Uber chief executive Dara Khosrowshahi and marketing team boss Jill Hazelbaker announced the restructuring internally, along with an aim of making the company's brand message more consistent, according to the company.

The loss per share, including those expenses totaled $4.72.

Uber and Lyft have historically relied on subsidies to attract riders, and have been spending heavily to expand into areas such as self-driving technology and food delivery.

"We're focused on improving profitability in this market and many other markets around the world and based on what we read Lyft seems to be focused in a similar way", Khosrowshahi said on the call. The company posted revenue of $3.1 billion during the quarter, a 14% increase from the year prior - hardly the rocket ship growth that investors typically expect from newly public technology firms.

Gross bookings, a measure of total value of rides before driver costs and other expenses, rose 31 per cent from a year earlier to US$15.76 billion.

Shares of Uber fell by as much as 12% in after-hours trading Thursday following the disappointing earnings report.

Even by Uber's standards, the company burned through a staggering amount of money in its most recent quarter.

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Revenue for the Uber Eats service rose 72% to $595 million, while ridesharing revenue grew just 2% to $2.35 billion because of the one-time driver appreciation payments, the company said.

Lyft's second-quarter adjusted EBITDA loss widened from $$190.5 million one year ago to $204.1 million.

Uber has consistently said 2019 was expected to be an investment year. It raised its revenue outlook.

"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", said chief financial officer Nelson Chai.

Research and development costs for the six months ended June 30 were $3.47 billion. Given the better than expected second quarter 2019 revenue result, Lyft said that the peak for operating losses was likely behind them. It also topped Wall Street targets of a $996 million loss.

Despite its plans to build a logistics empire, its steep losses and rocky entry to being a publicly traded company point to larger concerns about Silicon Valley "unicorn" start-ups, which have amassed millions of customers and raked in investor cash but have yet to prove they can turn a profit.

Without those charges, however, the company still lost about $1.3 billion during the quarter, a roughly 50% spike from the year prior.