AS Uber Technologies Inc. makes preparations for a possible initial public offering next year, the ride-hailing company is showing it can deliver soaring sales growth like a younger startup.
The San Francisco company’s first-quarter revenue rose 70% from the prior year to $2.59 billion, while gross bookings, a measure of how many rides and fresh food deliveries were made, jumped 55%, according to a financial statement released by Uber.
Uber swung to a profit of $2.46 billion from a loss of $847 million last year, due chiefly to a $3 billion gain from the sales of both its southeast Asian and Russia operations. Without that gain, Uber’s loss would have been roughly $550 million, narrower than in the past four quarters.
When compared with the fourth quarter, Uber’s gains in the first three months were modest—revenue rose 7.5% and gross bookings were up 4.3%.
“We plan to reinvest any overperformance even more aggressively this year, both in our core business as well in big bets like Uber Eats globally,” said Uber’s new chief executive, Dara Khosrowshahi, in a statement, referring to its prepared food delivery service.
Uber on Wednesday made a number of unrelated announcements that could have varying effects on its future financial statements. First, Uber said it would start paying some health-related benefits for drivers and couriers in Europe and possibly elsewhere, potentially adding significant costs to a business model that has relied on individual contractors rather than fully compensated employees. Separately, Uber announced it would shutter its self-driving vehicle operations in Arizona two months after a fatal crash there, but it would continue on in several other cities. Uber deems driverless cars crucial to its future business, but it is an expensive endeavor.
Also on Wednesday, Uber said a consortium of three investors—hedge fund Coatue Management, investment firm Altimeter Capital, and private-equity firm TPG Capital—will seek to buy between $400 million and $600 million in shares from existing investors at about $40 per share, implying a valuation of $62 billion. That is a higher price than the $33 a share, or roughly $48 billion valuation, that Japanese tech investor SoftBank Group Corp. paid when it bought about $6.5 billion worth of shares from investors in January.
SoftBank, which now holds a 15% stake, could potentially sell some of its shares for a quick profit, though a person familiar with the matter said it isn’t expected to do so. Investors and employees will have about a month to decide whether to sell, starting in late May.
The moves come as Mr. Khosrowshahi, who joined last summer, has been paring costs and making preparations toward meeting a goal of a 2019 IPO. The offering is expected to be one of the largest in recent memory. Though not required to as a privately held company, Uber now has released detailed results dating back to last year’s first quarter.
By most metrics, the nine-year-old company, with some 17,000 employees and a valuation of around $70 billion, resembles little of a startup. Uber has few if any public-market peers, so making any comparisons is tricky. The company makes most of its money by taking a roughly 25% commission for each fare.
Among big publicly traded app makers, its revenue growth is impressive. In the quarter before it went public in 2012, Facebook Inc., about eight years old at the time, delivered revenue of $1.06 billion, up 45% from the year earlier. But unlike Uber it was also profitable, and its business model is different, relying on advertising sales.
A closer peer might be Airbnb Inc., the decade-old, privately held company that lets people book rooms in homes and takes a cut of the price. Airbnb posted revenue of $2.57 billion last year and was close to breaking even with a $75 million loss. The company, which was last valued at $31 billion, didn’t provide year-ago comparisons.
Uber recorded revenue over $7 billion last year, but it lost more $4.5 billion, underscoring the challenges for Mr. Khosrowshahi to find ways to tame costs without spoiling growth. He has so far sold or closed underperforming divisions and cut back promotions to drivers and discounts to riders.
Uber’s cash position is strong, remaining over three months at about $6.3 billion as of March 31, thanks in part to a $1.25 billion direct investment from SoftBank on top of the $6.5 billion purchase of employee and investor shares.
Mr. Khosrowshahi still has to find a chief financial officer, chief compliance officer and fill four board seats including a new chair. His top pick for CFO, VMware Inc.’s Zane Rowe, has indicated he won’t accept the post, The Wall Street Journal reported earlier this month. - WSJ
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