Uber Technologies Inc. reported another mega-loss on Monday, but its chief executive said there is a light at the end of the profitability tunnel.
The ride-hailing service reported a third-quarter loss of $1.16 billion, or 68 cents a share, compared to a $986 million loss in the same quarter a year ago. The Q3 loss included $401 million in stock-based compensation. (The company’s official lockup period begins Nov. 6, when more than $20 billion of its stock hits the market.)
Uber shares UBER, -0.92% slid around 5% in after-hours trading.
Revenue improved 30% to $3.81 billion, from $2.94 billion a year ago.
Analysts surveyed by FactSet forecast a loss of 70 cents a share on revenue of $3.63 billion.
Uber has lost more than $7 billion so far this fiscal year, prompting a flurry of questions from some analysts about its long-term prospects.
But Uber Chief Executive Dara Khosrowshahi said in a conference call with Wall Street analysts that the company will be Ebidta profitable in 2021 as it “improves global scale and efficiency” through technology, automation and “more effective execution.” The company plans to offer fiscal 2020 guidance during its fourth-quarter financial report.
“I like where our margins are headed,” Khosrowshahi said.
Chief Financial Officer Nelson Chai noted during the conference call margin improvements in the rides market as a key path to profitability.
At the same time, Uber has shed more than 1,000 jobs, or more than 2% of its workforce, through three rounds of cuts in recent months.
“The concept is great, but the problem is I’m not sure ride-sharing is a profitable business with such large overhead costs,” Beth Kindig, an independent technology analyst in San Francisco, told MarketWatch in a phone interview. “Uber and Lyft are subsidizing rides to be cost competitive with taxis and draw customers.”
The third-quarter loss on Monday was significantly lower than the $5.24 billion shortfall in the second quarter — much of that tied to $3.9 billion in stock-based compensation expenses related to its May IPO. Uber reported 103 million monthly active platform consumers in its third quarter. FactSet expected 104.4 million. Gross bookings during the quarter soared 29% to $16.5 billion, vs. $16.7 billion forecast by FactSet.
Revenue for rides increased 19% to $2.9 billion in the third quarter. Uber Eats, the company’s food-delivery service, surged 64% to $645 million from the year-ago quarter.
Raymond James analyst Justin Patterson, however, anticipates narrowing losses for the fourth quarter ($639 million), and into 2020 and 2021 as the San Francisco-based company trims expenses and a price war with rival service Lyft Inc. LYFT, -0.35% cools. Patterson maintained an Outperform rating and price target of $54 in an Oct. 31 note.
Uber’s stock is down 34% since its May 10 debut, while the S&P 500 index SPX, +0.37% is up 23%.