Ride share giant Uber on Thursday reported a $1bn loss in the first quarter of this year despite rising revenue and monthly users.
In its first earnings report as a publicly traded company, Uber said revenue climbed 20% to $3.1bn from the same quarter last year, but that it lost $1bn.
“In the first quarter, engagement across our platform was higher than ever, with an average of 17mn trips per day and an annualised gross bookings run-rate of $59bn,” said Uber chief executive Dara Khosrowshahi.
The earnings were in line with Wall Street expectations.
Uber shares were up 3% to $41 in after-market trades that followed release of the earnings figures.
After debuting several weeks ago at $45 for the initial public offering (IPO) — translating to a market value of $82bn — Uber shares went into reverse.
The decline came amid doubts over Uber’s path to profitability despite one of the biggest tech IPOs ever.
Uber had dialled back some of its earlier ambitions for a value exceeding $100bn after a rocky start for competitor Lyft earlier this year.
While Uber has lost billions since offering its first rides in 2011 in San Francisco, the company is aiming to develop a global brand that helps transform local transportation.
Whether Uber can achieve profitability using this model, as it disrupts traditional taxi and transport services, is a key question.
Khosrowshahi said during an earnings call that he is proud of how the Uber team handled the IPO and that he has assured them the disappointing start is just a step on “the long journey of making Uber a platform for the movement of people and transport of commerce around the world at a massive scale.”
Uber’s chief financial officer Nelson Chai told analysts that 2019 would be a year of investment for the company. Uber envisions becoming the “Amazon of transportation” in a future where people share instead of owning vehicles. If all goes to plan, commuters could ride an e-scooter to a transit station, take a train, then grab an e-bike to complete a journey using the Uber smartphone app. Uber also has its eyes on the sky with an Elevate project to have electric aircraft carry people between “skyports,” taking off and landing vertically.
“They are basically asking the investors to ride with them and they are going to figure out where the profit is,” analyst Rob Enderle of Enderle Group said of Uber.
“They should already know where the profit is.” Investors seemed heartened by the growth of the Uber Eats meal delivery service and that executives spoke of battling US ride-share rival Lyft on service instead of pouring money into marketing or promotions.
Khosrowshahi outlined a vision of ramping up ranks of users by enticing various demographics to the platform with scooters, bikes, public transit, food deliveries or shared rides.
“If every user in every city around the world is opening up our app when they want to get someplace, we think that is going to lead to good things over time,” Khosrowshahi said.
“Having the full transportation offering on an app is a very powerful product, but we think it will take some time to come together.”
Revenue from Eats, a service that delivers restaurant meals, more than doubled from a year ago, according to Uber.
En+ Group, which manages the energy and aluminium assets previously controlled by tycoon Oleg Deripaska, said yesterday its first-quarter net profit fell by 39% to $409mn due to lower aluminium prices. En+ said revenue had declined by 19% to $2.8bn in the first quarter as a result of a 14% decrease in aluminium prices on the London Metals Exchange.
“The aluminium market continues to experience pricing pressure with only modest growth in global demand expected in 2019,” Vladimir Kiriukhin, En+’s chief executive, said in the statement.
US sanctions also hit the company’s sales volumes. “In the reporting period (US) sanctions throughout January adversely impacted the group’s sales’ volumes,” En+ said in a statement.
En+ and aluminium group Rusal, in which En+ owns a stake, were removed from the US sanctions list by the Treasury Department’s Office of Foreign Assets Control in January after Deripaska reduced his En+ stake.
In a presentation on the results, En+ said it expected to reverse the majority of US sanctions impact and to release between $600mn and $900mn of working capital.
It did not provide the time frame for this goal. En+ also said the US-China trade dispute had caused a decline in aluminium prices.
Rusal had said earlier in May it expected growth in global demand for aluminium to slow to 3% in 2019 from 3.6% in the previous year.
Revenue of En+’s power business fell by 12.4% to $874mn in the first quarter due to a weaker rouble.
But the business benefited from improved electricity sales volumes, higher prices and heat tariffs and delivered a 13.5% increase in net profit to $151mn.
Gap Inc cut its 2019 profit forecast and posted the biggest drop in same-store sales in at least three years at its Gap brand, underscoring its struggles to compete with fast-fashion retailers in the face of changing customer preferences.
Shares of the company, once a trendsetter with its casual logo emblazoned hoodies and khaki cargos, fell 11% in after-hours trading on Thursday.
Chief executive officer Art Peck called the quarter “extremely challenging” and cited unusually cold weather in February, late spring breaks, a delayed Easter and lower tax refunds as reasons for the dour performance.
Unseasonably cold weather has been a drag for most US apparel retailers in the first few months of 2019, with Gap Inc’s Old Navy especially hit as most of its apparel is tailored toward warmer weather.
However, analysts were unconvinced and felt the absence of in-fashion products was weighing on Gap brand’s turnaround efforts.
“Every quarter management claims that products are improving and that the (Gap brand) is responding to changing consumer demand,” said Neil Saunders, managing director of GlobalData Retail. “And yet every season, Gap churns out the same bland range of undifferentiated product which has barely changed over the past 20 years.”
On a post-earnings call, chief financial officer Teri List-Stoll acknowledged the lack of strong products at both Old Navy and Gap in the first quarter and said the company had held back on marketing until designs and assortments improved.
Sales at established Gap brand stores fell 10% in the three months ended May 4, steeper than the 4% decline analysts had estimated.
Peck replaced Gap brand’s head last year and hired a new marketing chief, in efforts to turn around the unit with more appealing products, shorter response times in bringing designs from sketchpad to stores and better advertising.
But those efforts are yet to succeed.
Quarterly same-store sales at the brand have risen only once since the start of 2016, according to Refinitiv data.
Adding to the worries, Old Navy, a bright spot for the company in recent years and which is being separated as a publicly listed company, reported a surprise drop in same-store sales.
Peck said he remained confident in Gap’s plan to separate into two independently companies in 2020 and had hired a dedicated team to manage the separation.
Overall same-store sales fell 4%, bigger than the 1.2% drop analysts had expected. The San Francisco-based company cut its 2019 adjusted earnings forecast to $2.05 to $2.15 per share, from a previous range of $2.40 to $2.55.
Dell Technologies Inc reported lower-than-expected revenue in the first quarter as its server business declined for the first time in 10 quarters amid economic conditions weighing on demand in China.
Dell shares fell about 3% in extended trading, even as its earnings topped expectations.
An industry-wide slowdown has been intensifying with the ongoing China -US trade war, and demand across industries in China has been declining.
Revenue from Dell’s servers unit, its second largest business, fell about 8.8% to $4.18bn in the first quarter.
Revenue in the Infrastructure Solutions Group, host to the server business, fell 5% to $8.20bn, missing analysts’ estimates of $8.94bn, according to FactSet.
Trade tensions have been dragging on demand across various industries in China, and tech heavyweights like Intel and Texas Instruments have spoken cautiously about it.
“Clearly the US-China trade tensions are a bit of overhang on the (servers) business,” Dell’s chief financial officer, Thomas Sweet, told investors in a post-earnings call. “The server business saw this dynamic of a bit softer market coupled with some very large opportunities that were extraordinarily price aggressive,” Sweet told Reuters.
Dell has been planning for a potential fourth list of tariffs on Chinese products that could include notebooks and monitors, and will adjust its global supply chain as needed.
Dell’s total net revenue rose 2.6% to $21.91bn in the three months ended May 3.
On an adjusted basis, revenue of $21.99bn missed analysts’ average expectation of $22.24bn, according to IBES data from Refinitiv.
“Dell felt the impact from softness in the server market while also favouring profitability over revenue in China and some larger opportunities that became too price sensitive,” Mark Cash, an analyst at MorningStar, said.
Dell swung to a profit in the quarter, reporting net income attributable to the company of $293mn, compared with a loss of $636mn a year earlier.
Excluding certain items, Dell’s earnings were $1.45 per share in the quarter, beating Wall Street’s expectations of $1.21.
The server business also overshadowed a 13% jump in revenue from commercial customers, which was largely due to Microsoft Corp’s decision to end support for Windows 7 in early 2020.
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