Uber has achieved a groundbreaking milestone by announcing its first-ever annual operating profit since becoming a limited company. The controversial US taxi app firm has turned its staggering $1.8 billion loss from the previous year into a remarkable $1.1 billion profit. This significant achievement comes after years of Uber aggressively expanding its business globally with billions of dollars of investors’ money.
In 2023, Uber reported a profit of $1.1 billion, a stark contrast to its $1.8 billion loss the previous year. The company’s success has sparked speculation amongst investors about potential buybacks of shares or even dividend payouts. Uber’s chief financial officer, Prashanth Mahendra-Rajah, announced that the company would share its capital allocation plans with investors in the coming week.
Following this news, Uber’s share price initially dipped but rose by 1% on Wednesday. The stock has risen by over 20% throughout 2024 and has doubled in value over the past year, valuing the company at nearly $150 billion.
Over the last quarter of 2023, Uber witnessed customers booking a staggering 2.6 billion trips, translating to approximately 28 million trips per day. Dara Khosrowshahi, Uber’s CEO, expressed his enthusiasm, stating that 2023 marked a turning point for the company and showcased their ability to generate robust and profitable growth at scale. Khosrowshahi further highlighted that Uber’s platform powered an average of nearly 26 million daily trips last year, demonstrating the increased engagement of their larger audience.
Uber’s journey began in 2009 when entrepreneurs Garrett Camp and Travis Kalanick founded the company. Kalanick subsequently assumed the role of CEO in the following year, overseeing a rapid expansion of the app across the United States, Europe, and numerous cities worldwide. Uber’s growth was largely facilitated by embracing the gig economy, designating its drivers as self-employed in many countries, thereby bypassing obligations such as sick pay and paid holidays.
Kalanick’s tenure as CEO was marred by a series of scandals and confrontations with regulators across various cities globally. A leak reported by The Guardian in 2022 exposed how Uber had violated laws, deceived law enforcement, and engaged in undisclosed lobbying efforts while expanding its services.
In 2017, Kalanick was replaced by Dara Khosrowshahi, the former CEO of travel agent Expedia. Khosrowshahi aimed to soften Uber’s image and prioritize compliance with regulators’ requirements.
Wedbush analyst Dan Ives praised Khosrowshahi’s leadership, describing it as one of the most remarkable turnarounds ever witnessed in the tech industry. Ives also emphasized that Uber shows no signs of slowing down, solidifying its position in the market.
Uber had consistently reported substantial operating losses since its initial public offering on the New York Stock Exchange in May 2019. Losses surged from $3 billion in 2018 to $8.6 billion in 2019, before gradually declining to $4.9 billion in 2020, $3.8 billion in 2021, and $1.8 billion in 2022.
In 2023, Uber finally achieved profitability, primarily driven by an increase in demand. Gross bookings, which represent the total paid by Uber passengers and delivery customers, rose by 22% to $37.6 billion during the final quarter of 2023 compared to the previous year. Uber’s revenue from these transactions amounted to $9.9 billion.
This landmark moment for Uber is not only significant for the company but also for the global ridesharing industry. It showcases the potential profitability of a sector that has long relied on investor funding to sustain its expansion.
As Uber continues to navigate the evolving landscape of the gig economy and address ongoing regulatory challenges, it is evident that their position in the market remains strong. With their larger and more engaged audience, Uber is poised for further growth and continued success in the years to come.
