Uber narrows losses in Q3, pledges profitability by 2021 and "magical company" aim

Uber Technologies is still losing money, but managed to narrow its net loss down from $5.2 billion in the previous quarter to $1.2 billion in the third quarter.

Adjusted EBTDA for the quarter was a $585 million loss.

In a call to discuss earnings, CEO Dara Khosrowshahi pledged total company EBITDA profitability by 2021.

“The world's magical companies are the ones that can compound top line growth at massive scale, improve margins, allocate capital efficiency and do the right thing for all of their constituencies,” says Khosrowshahi.

“We're working hard to be one of those magical companies.”

The San Francisco-based rideshare company saw its revenue increase 30% year-over-year to $3.8 billion, falling in line with analyst expectations between $3.4 billion and $3.9 billion.

Gross bookings grew 29% year-over-year from $12.7 billion in the third quarter of 2018 to $16.5 billion in 2019.

The number of monthly active platform consumers skyrocketed by 26% from 82 million in the third quarter of 2018 to 103 million last quarter.

By Segment

Uber’s core rides business generated a 20% year-over-year increase in gross bookings to $12.5 billion, with revenue jumping 19% to $2.8 billion.

Adjusted EBITDA for rides is up 52% year-over-year to $631 million, which fully covers Uber’s corporate overhead.

“We continue to be the rides leader in every region in which we operate, growing or maintaining category position in our most important markets, including the United States, Latin America and the United Kingdom,” says Khosrowshahi.

However, rides is the only segment to produce a positive EBITDA this quarter.

Despite increases in gross bookings – including a 73% increase for Uber Eats and an 81% increase for Uber Freight – all other business segments except for rides posted a negative EBITDA.

Workforce issues

In order to reach profitability sooner, Uber laid of over 1,000 employees this year – roughly 2% of its workforce.

“We've already made some tough decisions regarding our head count and resource allocation to make sure we've got the very best teams working against the highest return projects,” says Khosrowshahi.

In September, California passed a bill that would require companies such as Uber to reclassify workers as employees instead of independent contractors, which would enable drivers to new rights and benefits.

Uber is teaming up with Lyft and DoorDash for support of a California ballot measure that exempts those companies from the regulation, but still provides some benefits to drivers.

“We continue to focus on a path that we believe provides a very attractive option for drivers and couriers where they retain flexibility but gain important new protections like healthcare subsidies and minimum earning standards,” says Khosrowshahi.

Despite these workforce headwinds, Khosrowshahi remains confident in Uber’s future path to profitability.

“Moving forward, we expect to drive continued top line and margin growth by investing in our marketplace, doubling down on our premium product offerings as well as continued financial discipline,” he said.

“Our teams are confident that they can draw strong, top and bottom-line growth over the next several years.”