By Natalie Walters
Uber quieted its critics on Wednesday when its improved quarterly results didn’t seem to reflect any damage done by its scandalous first half of the year.
The ride-sharing company reported a 16% increase in quarterly bookings despite recent controversies at the company, including allegations of sexual harassment, and its continuing search for a CEO.
“The reality is the vast majority of people just want to get from point A to point B as quickly and as cheaply as possible,” said Mitchell Green, managing partner of Uber investor Lead Edge Capital. With a valuation of $68.5 billion, San Francisco-based Uber is the most highly valued private start-up in the world.
Uber also managed to report a narrower loss for the past quarter than the previous period. For the second quarter, Uber reported a loss of $645 million, which is 9% less than the $708 million it lost in the first quarter. While Uber execs haven’t laid out a clear road to profitability, Green isn’t worried. “Profitability is coming — I have no doubt,” he said.
Uber should get a boost in the next quarter after announcing in early August that it was shuttering its subprime car-leasing operation called Xchange that helped get cars for Uber drivers with bad credit scores, according to Green. The company decided to do away with the business after realizing they had miscalculated how much they would lose per vehicle. Uber lost an average of $9,000 per car, vs. the $500 per car that it originally predicted. “That should really help them out,” Green said.
The bottom line is that Uber is making a lot of money off of riders because it doesn’t have to pay to acquire them, they just keep coming back on their own, Green said. “Uber is literally printing money off its riders and it’s an enormous market,” he said. “Once you use Uber once, you tend to get addicted.”
Of course, this past quarter was under CEO Travis Kalanick, who resigned in June following pressure from some investors and directors demanding that he step down. While sources told CNBC this week that Hewlett Packard Enterprise (HPE) CEO Meg Whitman and General Electric (GE) CEO Jeff Immelt are the frontrunners to take his place, Whitman has firmly denied that she is in the running.
Whitman reiterated her lack of interest in the job earlier this week.
Green said Uber probably has a long list of people eager to take the top job because the market is huge and the company is growing. He also noted the company will run fine without a CEO for as long as it needs to because its operating committee of 14 executives will keep things humming along nicely. CEOs aren’t indispensable, he said. For example, even if Facebook (FB) were to lose high-profile CEO Mark Zuckerberg, the social media powerhouse would keep running fine, Green said.
To continue improving its financial situation, Uber will most likely focus on its top line, continue to invest in growth and focus on profitability, he predicted. The future is bright for the company despite four fund managers cutting estimates for the price of Uber shares, which Green said is irrelevant. T. Rowe Price Group cut the estimated Uber share price by 12% to $42.70, while three other investors (Vanguard Group, Principal Funds, and Hartford) all cut estimates by 15% to $41.46.
Uber’s fundamentals are still strong and that can’t be denied, Green added.
The company’s improved quarterly results come amid a largely turbulent year for Uber. Earlier this year, the company faced several bouts of widespread public criticism during the #deleteUber movement, when more than 200,000 users deleted their accounts on the app. On top of that, a blog post from former engineer Susan Fowler, with included allegations of sexual harassment, spurred several investigations into the company’s toxic workplace culture, a stream of executives fled the company and, ultimately, former CEO Travis Kalanick resigned from his role. Uber is now in need of a CEO, COO, CFO, CMO and SVP of engineering.