Uber ends a turbulent year with reduced losses in Q4 2017
Uber is probably really happy to leave 2017 behind. It was a particularly tough year for the ridesharing giant, which saw scandal after scandal rock the company and erode consumer confidence. From Susan Fowler’s explosive blog post about sexual harassment to changes in senior management to multiple legal issues, including a long-drawn battle over the theft of trade secrets from rival Google subsidiary Waymo – things just kept getting worse for Uber.
However, the company appears to have found its footing again, if a little shaken and wobbly on its feet. Uber settled its court case with Waymo, pledging to never use the stolen trade secrets for software and hardware development as well as giving over a 0.34 percent stake in the company, valued at around $245 million. Travis Kalanick’s resignation in June 2017 and the subsequent appointment of former Expedia boss Dara Khosrowshahi as CEO appears to have reassured customers and investors a little towards the final months of the year.
In its recently released report for the fourth quarter, Uber revealed that it has actually managed to reduce its quarterly losses and move a step closer to profitability. The company earned nearly $11.1 billion in gross revenue in Q4 2017, up by $1.4 billion from Q3 2017 and nearly double the figure from Q4 2016. Adjusted net revenue came up to $2.22 billion, a 61 percent increase from the same period the year before. Despite a turbulent year for the company, it still managed to earn sales of $7.5 billion, although this was tempered by a substantial loss of $4.5 billion, an unprecedented number.
The losses are because of commonly accepted accounting practices, such as write-downs, as well as a costly year in terms of legal fees. All said and done, Uber ended the year with around $6 billion in cash, 13 percent lower than 2016.
For many observers, the losses are relatively lower than expected, given all the bad press Uber received over 2017. However, many have credited Dara Khosrowshahi as a stabilising presence, especially since Q4 2017 was his first full quarter after taking charge in September. A $9.3 billion investment by SoftBank in January has also been a helpful boost, as the global investment firm became the largest shareholder in Uber in exchange for the promise that Uber holds as the world’s largest ridesharing company.
Since becoming the lead shareholder, SoftBank has been wary of Dara’s aggressive global expansion plans, but the CEO seems to be pushing ahead nevertheless. India continues to be a big market for Uber and new services like the recently launched Uber Auto appear to be symptomatic of a greater focus on expanding the customer base in the Indian market.
Uber has its eyes set on an IPO for 2019 which gives it the coming year to rebuild customer confidence and re-establish dominance. The company is facing stiff competition across the board, losing 12 points of its home US market to Lyft in 2017, as well as seeing new competitors take up the fight against it in markets like Japan. Now that the Waymo case is settled, Uber will be eager to put the ghosts of 2017 behind it and focus on the future.