Did Uber Suffer A Sudden Fall In Its Annual Revenue?

Posted by Anand Rajendran in Business and Economy
February 23, 2017

The ride-hailing giant Uber Technologies is not a public company. A great disappointment is that Uber has lost a huge amount of money in the second quarter. Even in the US, where Uber had turned a profit during its first quarter, the company met a huge loss in the second quarter. Uber has raised more than $16 billion in cash and debt.

Uber Lost Business In The Tech Market

In the first quarter of the year 2016, Uber lost about $520 million in its market. In the second quarter, the losses significantly crossed $750 million, including a roughly $100 million shortfall in the US. That means, Uber’s losses in the first half of 2016 summed up at least $2 billion. It is said that Uber drivers are responsible for the majority of the company’s loss globally.

In terms of gross revenue, which includes driver payments, Uber took about $6 billion in first quarter, just 8% more than $5 billion during the second quarter. For the past one year, when gross revenue more than doubled every quarter before of the sale of its Chinese business. But Uber’s net revenue, which excludes driver payments, grew to about $2 billion in the third quarter. In the second quarter, it had about $2 billion in net revenue.

Are Developed Markets Profitable For Uber

Uber has lost about one billion in China. However, this ride-sharing app is profitable in the developed markets. The most important factor is that the famous ride-hailing company “Uber” is profitable in the Middle East regions accounting for all general and administrative costs but excluding the interest and tax. In America, where Uber has been operating since 2013, it faces competition from a number of companies like Lyft, Ola etc.

Uber has been in hundreds of cities that are profitable all over the world, which encourages them to invest in new places and to sustainably invest in an expensive place like China. Uber is biggest in terms of ride numbers. It is said to be Uber’s Chinese business will be profitable in future.

A recent report says that Uber is still rocking in every major US city, but Lyft has just started growing up. The people in the US claim that Lyft is not even close to Uber. In Denver, Uber has about 62% of the market shares and Lyft has about 38%. In Houston, Uber has surpassed Lyft where Uber has about 97% of the market share compared to that of 3% of Lyft. Even though it is said to Lyft is making steady progress.

Uber In China

Uber pays a bulky bonus to their drivers in China. It is facing a heavy competition from the market leader, Didi Chuxing. The companies don’t agree exactly on share markets, but Didi Chuxing holds more than 80% of the market in present. As for China, Uber is financing through its primary business’s profits, Uber’s lenders, and through some people directly investing in Uber China.

Uber In Saudi Arabia

Uber has just closed one of the largest funding rounds by a tech company in recent history. The gigantic ride-sharing company is the most capitalised one among the private companies. Uber is competing with Lyft in the US, Didi Chuxing in China and Ola in India, but still, considers the Middle East is an important area for the company. It has a plan to invest $250 million in the region, where it currently operates in 15 cities across nine countries.

Uber’s Market Share In The US

Both Lyft and Uber have long been battling it out for ride-hailing dominance in the US. According to a recent report, Uber told its investors that it has between 84%-87% of the US market share. In the city like San Francisco, Lyft and Uber are much closer regarding market share, but in New York, Uber has beaten Lyft by a much wider margin. Between the years 2015 and 2016, Uber completed crores of trips while Lyft has completed a lakh.

There are several cities in the US where Uber is the only ride-hailing app currently used by the citizens. Both Uber and Lyft has increased spending and offer a subsidy to win overrides and drivers. Uber has lost its battle with Didi Chuxing in China and Lyft posted an operating loss of $360 million in its effort to gain market share nationwide.

The Backlash Against Uber

The recent backlash against Uber made its competitor Lyft to grow in its business. For the first time in history, Lyft was downloaded more times than Uber in the US. Lyft has also been trending in Apple’s App Store and has climbed to the fourth position in the top free apps chart succeeding Uber which is on the 13 place now.

Lyft’s sudden rise in the popularity is because, during the strike, thousands of Uber consumers deleted the app in frustration. People on social media also deleted the app along with the hashtags. However, Lyft’s spike in downloads is not indicative of customers using the service in place of Uber. The recent growth of Lyft is a good sign for the company, but whether this is permanent or not is still not clear. Uber remains the most popular ride-hailing app in the US

What Uber’s Loss Adds Up To

Uber generated nearly $2 billion in net revenue in the third quarter. The company is about to surpass $6 billion of net revenue in fiscal 2016. The report claims that Uber lost nearly $2 billion in the first half then $3 billion in the next quarter. Uber’s recent loss was to the tune of $68 billion.