Despite $8.5 billion loss in 2019, Uber sees profit by end of 2020; claims market leadership in India

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Published: February 9, 2020 4:05:29 PM

Uber reported 37 per cent year-over-year growth in revenues to $4.1 billion and a net loss of $1.1 billion up from $887 million for the same quarter last year.

Uber claimed the top position in other markets too such as the US and Canada, Latin America, Europe etc. (Image: Reuters)

SoftBank-backed ride-hailing company Uber in its Q4 2020 results has claimed to be the market leader in India where it competes with Ola with SoftBank as the common investor. Without disclosing the figures, the company claimed over 50 per cent market share in India in terms of the number of rides. The share is based on its internal estimates of gross bookings, the company said as it claimed the top position in other markets including the US and Canada, Latin America, Europe etc. Ola’s ride numbers are also not public.

However, Ola is the largest ride-hailing company in India if one looks at the monthly active users (MAUs) even as it is ahead of Uber in terms of app downloads. From around 27 million MAUs in December 2018, Ola had 23.96 million MAUs in November 2019 ahead of Uber which had around 15 million MAUs in December last year and 13.13 million last month, according to the data shared by the market intelligence firm SimilarWeb. Ola’s monthly downloads stood at 67.41 million while for Uber it was 45.73 million.

The company, which reported 37 per cent year-over-year growth in revenues to $4.1 billion and a net loss of $1.1 billion up from $887 million for the same quarter last year, is hopeful of ending 2020 with EBITDA profitability in Q4 2020. “As Dara (Khosrowshahi) stated, based on our visibility into 2020 trends, we are pulling forward our profitability expectations, and now plan to end 2020 with Q4 marking our first EBITDA positive quarter,” said Nelson Chai, CFO, Uber. This is despite a full-year loss that Uber expects in 2020 even as its 2019 losses stood at $8.5 billion. “For 2020 adjusted EBITDA, we expect a loss of $1.45 billion to $1.25 billion,” Chai added.

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The challenge to ending 2020 with profit on an adjusted basis can be solved assuming if there are “only modest improvements in the current competitive environment, and without the assumption of any significant changes to our current portfolio of businesses,” Khosrowshahi said as he later explained the company’s execution to hit profitability.

“With a $700 million increase in ANR (Q4 to Q4), they delivered a $550 million increase in EBITDA. So that’s an 80% flow-through of incremental EBITDA from revenue growth to EBITDA growth,” he said. For a profitable Q4 2020, “if you look at, for example, let’s say, the mid-range of our revenue growth, you would have about $1.0 billion to $1.1 billion of additional revenue Q4 next year to — versus Q4 this year. And in order to get to break even, you need to drop about 55% of that incremental ANR to the bottom line.”

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