Here’s Why Uber Lost More Than $1 Billion In The First Half Of This Year

Uber reportedly lost about $1.2 billion in the first half of the year, showing red ink even in the U.S. where it boasted in 2016 that it was profitable.

Bloomberg cited unnamed sources who said the San Francisco on-demand ride company’s finance chief disclosed the numbers in a conference call with Uber’s private investors on Friday.

He told them the most highly valued venture-backed company in the world lost about $520 million in the first three months of 2016, before interest, taxes, depreciation and amortization. The losses grew to more than $750 million in the second quarter, including a roughly $100 million U.S. loss.

Most of the deficit was reportedly because of subsidies for Uber’s drivers.

Finance chef Gautam Gupta also told investors that bookings in the second quarter grew to more than $5 billion from $3.8 billion in the first quarter. Net revenue grew about 18 percent in that same period to about $1.1 billion in the second quarter.

But Gupta also said that Uber changed how it calculates UberPool’s contribution to revenue in the second quarter, which artificially increased its revenue.

Uber’s losses have grown as the company has grown globally. It has lost at least $4 billion since it started seven years ago, with $2 billion of that coming in 2015.

But at least one big source of red ink for the company, its operations in China, should abate. Uber last month agreed to stop doing business in the country in exchange for $1 billion and a 17.5 percent stake in its biggest rival there, Didi Chuxing. As a result, the company told investors it won’t see any more losses from China after this month.

Uber’s numbers are precedent-setting in many ways. It has raised over $16 billion from investors who include GV (formerly Google Ventures), Benchmark, Menlo Ventures and Fidelity, who have valued the company at more than $68 billion.

But its losses are also historic for a venture-backed company. By comparison, two of the biggest symbols of the dotcom bust — Webvan and Kozmo.com — each lost about $1 billion before going belly up. Amazon made a habit of losing money while growing its market share, but never lost more than $1.4 billion in a single year.

Source: Silicon Valley Business Journal, Cromwell Schubarth
Photo: Uber CEO Travis Kalanick has grown the valuation of his company to more than $68 billion, but it is losing unprecedented amounts while doing that. (Marlene Awaad, Bloomberg)