‘Era of growth at all costs is over’: Uber CEO promises profits by end of 2020

7 Feb 2020

Image: © Aleksei/Stock.adobe.com

After reporting substantial losses in previous quarters, Uber now claims that it will be profitable by the end of the year.

Shareholders in the ride-sharing company Uber have been emboldened after its CEO, Dara Khosrowshahi, claimed following its latest earnings report that the business will soon be in the black.

According to the BBC, Khosrowshahi claimed that the company will become profitable by the end of 2020, just a few months after it reported a quarterly operating loss of $5bn. Its latest quarterly earnings figures show that it made a loss of $1.1bn, which was less than market predictions.

Total losses for 2019 amounted to $8.5bn, with revenues in the last quarter totalling $4bn. The claim made by Khosrowshahi and the reduced losses saw Uber’s shares rise by 4pc in after-hours trading.

The number of Uber trips taken in the quarter rose by 28pc, with Uber saying that, when adjusting for tax, its core ride-sharing part of the business turned a profit in the last three months of the year.

“We recognise that the era of growth at all costs is over,” Khosrowshahi said.

“In a world where investors increasingly demand not just growth, but profitable growth, we are well-positioned to win.”

Digging out of a financial grave

The company has been trying to cut costs substantially the past year, announcing last September that it was laying off 435 members of its product and engineering teams. This was followed by a further 350 staff in October, affecting employees across multiple divisions such as Uber eats and its self-driving group.

Last month, Uber sold its Uber Eats business in India to Zomato due to intense competition and the need to spend heavily on subsidies and promotional offers to entice customers.

Aside from trying to balance the books, Uber has also faced regulatory issues after it lost its licence to operate in London over concerns for passenger safety. Despite appeals keeping its cars on the road of its most profitable European city, the company could be completely forced out of London by the end of this year.

Regarding Uber’s promises around profitability, Alyssa Altman, transportation lead at digital consultancy Publicis Sapient, is somewhat sceptical of its chances.

“Uber’s latest attempts to shed money-losing businesses, while promising, don’t guarantee it will dig itself out of the financial grave it dug for itself,” she said.

Colm Gorey was a senior journalist with Silicon Republic