Uber, the most valuable startup in the world, seems to be financially struggling, as a Bloomberg report revealed that the company has lost $1.27 billion over the first half of the year.
The company, which was most recently valued at $62.5 billion, is not a public company, which means that it does not need to disclose its financial performance. Only dozens of shareholders listen in on a conference call held every quarter by Uber head of finance Gautam Gupta to know how the company is performing, and these people will likely not have been impressed with what they heard in the latest call.
According to the report by Bloomberg, Gupta told investors that the losses of Uber worsened during the second quarter.
In the first quarter, Uber posted a negative EBITDA of $520 million, according to Bloomberg's sources. The figure dipped even lower to a loss of $750 million in the second quarter, including about $100 million loss in the United States, taking the losses of Uber for the first half to a total of $1.27 billion.
Gupta told investors that most of Uber's losses globally were due to the subsidies to its drivers, which the company gave out in order to keep the prices low so that customers will continue using the ride-sharing service.
Most of the drivers that received subsidies are from China, where Uber was locked in a high-cost battle with local ride-hailing service Didi Chuxing. Uber recently decided to sell its China business to Didi for $35 billion, though, as the startup realized that it had no chance of beating its rival in the Asian country. As such, Uber will not be recording losses related to China in its financial statements after this month.
In the United States, Uber's standing is not as solid as previously hinted. Earlier in the year, Uber CEO Travis Kalanick said that operations in the United States are stable, but the $100 million loss that the startup posted in the second quarter for its home operations is a legitimate concern.
Similar to China before its exit, Uber is facing a fierce competitor in the United States in the form of Lyft. As the ride-sharing services continue to lower their fares, they are both forced to issue subsidies to their drivers. There have been rumors that Lyft is looking to be bought out, but until that happens or until Lyft is driven out of business, Uber will have to continue the battle against its rival in the United States, even if that means to continuously accept mounting losses.
This month has not been a good one at all for Uber. After being forced to cut its losses and sell its Chinese operations, Uber saw its proposed $100 million settlement for a class action lawsuit filed by drivers rejected. Just recently, the startup was also beaten to the punch in offering self-driving taxis to passengers by MIT spinoff nuTonomy, which has launched a public trial in Singapore.
Not everything is bad for Uber, though, as bookings increased significantly from more than $3.8 billion in the first quarter to more than $5 billion in the second quarter. GAAP net revenue also increased from about $960 million to $1.1 billion, equivalent to an 18 percent increase between the past two quarters.