Uber Posts $708 Million Loss as Finance Head Leaves
Uber Posts $708 Million Loss as Finance Head Leaves
Gautam Gupta’s exit sets the stage for a second major executive search at ride-hailing firm
By Greg Bensinger Updated June 1, 2017 12:06 a.m. ET
Uber Technologies Inc. said its head of finance is leaving as the ride-hailing company reported continued big losses despite increasing revenue, adding to an exodus of top officials and setting the stage for a second major executive search.
The ride-hailing company on Wednesday told The Wall Street Journal that first-quarter revenue was $3.4 billion, up 18% from the fourth quarter. Its loss, excluding employee stock compensation and other items, was $708 million, narrower than the $991 million reported three months earlier.
The company, which has raised some $15 billion in equity and debt funding, said it still has $7.2 billion of cash left on hand, about the same as it had at the end of last year.
Uber is privately held so it isn’t required to release financial results, but since April has begun offering a glimpse as it considers an eventual initial public offering. It didn’t release year-earlier results. “The narrowing of our losses in the first quarter puts us on a good trajectory towards profitability,” an Uber spokesman said.
Uber said its head of finance, Gautam Gupta, 37 years old, is leaving the company in July to join another startup in San Francisco. The company declined to disclose the name of the startup. Uber has begun a search for a chief financial officer with public-company experience as it looks toward an IPO, an executive familiar with the matter said.
“During my time here, I have been incredibly inspired by Uber’s deep operational excellence—so much so that I have decided to give it a try myself,” Mr. Gupta wrote to his finance team in an email reviewed by The Wall Street Journal. Chief Executive Travis Kalanick, in his own note to employees, thanked Mr. Gupta for his work at Uber.
Since 2015, Uber has been without a chief financial officer after Brent Callinicos took on an advisory role and left to join transportation startup Hyperloop One the following year. Mr. Gupta, who joined Uber in 2013, served under Mr. Callinicos as head of finance but wasn’t elevated to the financial chief position.
Uber is now in the delicate position of hiring two top deputies for Mr. Kalanick while grappling with a series of scandals. The hires could prove pivotal if the world’s most valuable startup, which is valued by its investors at nearly $70 billion, hopes to one day win over Wall Street.
Since early March, when Mr. Kalanick said he needed management help, the company has interviewed candidates for its first chief operating office, interviewing executives from companies including Wal-Mart Stores Inc. and Walt Disney Co., The Wall Street Journal has reported. Uber has declined to discuss specifics of the search.
So far this year more than a dozen executives and top managers, many reporting to Mr. Kalanick, have either resigned or been fired by Uber while the company has come under intense scrutiny, sparked by a report from a former female engineer alleging pervasive sexual harassment and sexism. The alleged conduct, which Mr. Kalanick condemned, prompted a broad investigation into its workplace led by former U.S. Attorney General Eric Holder. A formal report is set to be released next week.
The company is also contesting a lawsuit by Google parent Alphabet Inc. over alleged trade-secret theft that led to the firing of the former head of its self-driving car division, Anthony Levandowski. At the same time, Uber faces a federal probe into the use of a software tool it designed to thwart regulators from cracking down on drivers, and in recent weeks it said it had shortchanged drivers in both Philadelphia and New York City by a combined tens of millions of dollars because of faulty accounting. Uber has declined to comment on the federal probe.
Mr. Kalanick is managing all of this while suffering a personal tragedy this past weekend, when he learned his mother had died in a boating accident that left his father seriously injured.
Until these series of events, Uber was widely believed to be headed toward an IPO as soon as next year. The company hasn’t publicly disclosed when it plans to hold an IPO.
Beyond putting to rest the controversies, Uber will likely need to iron out a business model that led to at least $2.8 billion in losses last year, equivalent to nearly half its reported $6.5 billion in sales.
The loss figure excluded a series of items including results from Uber’s business in China, which was losing about $1 billion a year and which it agreed to sell last summer to rival Didi Chuxing Technology Co.
Uber generates revenue by taking a cut—generally 25%—of a driver’s fares. Its gross bookings, which include the ride-hailing business, UberEats food delivery and Uber Freight, a new trucking division, rose 8.7% to $7.5 billion in the quarter ended March 31.
Uber’s revenue growth rate, however, fell between quarters to 18% from 74% in the fourth quarter. Uber says the final three months of the year are its busiest.
The company will focus its search on a seasoned financial chief who can maintain Uber’s surging growth while containing the losses. The company has burned money by lowering fares in fiercely competitive markets and offering rewards for drivers to lure them from rivals. Uber has fought regulators, and drivers in court, to preserve a business model that relies on independent contractors, which don’t receive employee benefits or compensation for fuel, vehicle maintenance and other expenses.
Mr. Kalanick has pushed Uber since last year to develop self-driving cars, which could drastically lower its costs by cutting out the human costs. But the company’s self-driving car division is clouded by the lawsuit from Alphabet, and this week’s firing of its top driverless-car executive, Mr. Levandowski, nine months after buying his startup for $680 million. Mr. Levandowski, charged with conspiring to steal Google’s driverless-car secrets, hasn’t responded to requests for comment about the case or his firing.
Write to Greg Bensinger at firstname.lastname@example.org
Appeared in the June 1, 2017, print edition as 'Uber Loses Finance Head.'