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What's going on?
Amid a tumult of scandals and bad PR, Uber released its first quarter financial details and said they showed the company was on a path to profitability.
What does this mean?
Uber has been in the news for the wrong reasons recently: its the subject of a sexual harassment investigation and is embroiled in a legal battle with Waymo (formerly Googles autonomous car division) over illicitly obtaining cutting-edge technology. Meanwhile, a parade of senior executives have left the company (including, it was announced on Thursday, its finance chief).
On the plus side, Uber continues to post revenue growth: it told the Wall Street Journal on Thursday that it made $3.4 billion of revenue in the first quarter, up 18% over the previous quarter. Its also losing less money: only $708 million in the first quarter, down from $991 million last quarter.
Why should I care?
The bigger picture: Eventually companies have to turn a profit.
Uber spends a lot of cash which is fine, so far, because its raised a lot of money from its investors! Its strategy appears similar to Amazon, Facebook and other technology giants. In their early days, those companies were not too worried about turning profits while they built up a commanding position in their respective markets. While the pressure is building on Uber to show that it could soon be profitable (at least, if it wanted to be), investors seem content to keep investing in Uber in the hope it will be profitable eventually.
For markets: All this controversy may threaten Ubers IPO.
Although Uber has not publicly committed to becoming a public company, theres a widespread perception that it eventually will do so, potentially as soon as next year. However, the departure of high-level management and the various scandals could put those plans on hold, at least until there are new, respected senior executives aboard.
Originally posted as part of the Finimize daily email.
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