Naperville Business Lawyer Discusses Uber’s Second Quarter Earnings Report

Uber, Naperville business law attorneyFor approximately the last decade, Uber has been on the leading edge of what has become known as the “gig economy.” In a gig economy, organizations and individuals tend to work more with independent workers for short-term engagements as opposed to longer-term arrangements. The gig economy mindset is growing so fast that a recent study conducted by Intuit predicts that by 2020, as many as 40 percent of the American labor force would be independent contractors.

As a business law attorney, I understand that there are many advantages to working within a gig economy, but there are also some potential risks and drawbacks. Such seems to be the case for Uber, as the ride-hailing company’s most recent earnings report shows that a net loss of nearly $900 million for a single quarter.

Voluntary Quarterly Reporting

Uber is a San Francisco-based company that is privately held. The company, however, chooses to release quarterly statements to both its investors and the public at large. The last couple years have been tough from a cash-flow standpoint, as Uber is in the process of trying to scale its operations to a global level. During the second quarter of 2017, for example, Uber reported losses of $1.1 billion. For the same quarter this year, the reported losses were “only” $891 million. The second quarter losses were especially notable in light of the profits reported for 2018’s first quarter. Those profits were the result of Uber selling off its operations in Russia and Southeast Asia.

This year’s revenues were up compared to last year, with total sales increasing 63 percent to $2.8 billion, but growth seems to be slowing as well. First quarter revenues were up by 70 percent this year over the first quarter of last year.

Growth Over Profits

Company executives maintain that the health of the company is fine, despite possibly concerning numbers. CEO Dara Khosrowshahi has directed substantial funds into projects such as the Uber Eats food delivery service and Jump, Uber’s bike-sharing arm. The “big bets,” along with continued investments of $125-200 million per quarter in self-driving technologies, are expected to fuel Uber’s continued growth over the next few years. For now, however, Uber’s self-driving unit is reportedly accounting for up to a third of the company’s quarterly losses over the last year and a half.

The reported losses are not expected to affect Uber’s plans for an initial public offering sometime in 2019. Investors do not appear to be scared either, and the earnings report says that Uber still has more than $7 billion in available cash to continue its operations.

Analyzing Your Revenues

While your company’s revenues may not include as many zeroes as those of global businesses like Uber, it is still important to provide accurate reports to your investors. If you have questions about keeping your investors up to date on the health of your business, contact an experienced Naperville business law attorney. Call 630-756-1160 for a confidential consultation at The Gierach Law Firm today.

 

Sources:

Bloomberg

The Verge

Washington Post