Uber unveils IPO with warning it may never make a profit | Daily Mail Online

Uber has admitted it may never make a profit after revealing comprehensive financial details of the decade-old company for the first time.

The firm also spent $457 million (£350m) investing in self-driving cars, flying taxis and other technologies in last year alone.

Information about Uber's finances were made public as part of an IPO filing ahead of going public on the New York Stock exchange.

The S-1 filing underscores Uber's rapid growth in the last three years, attracting 91 million users to its ride lift service.

It also shows how a string of public scandals and increased competition from rivals have weighed on its plans to attract and retain riders.

That includes the death of a pedestrian in Tempe, Arizona, in March 2018 at the hands of one Uber's self-driving test cars.

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Uber has admitted it may never make a profit after revealing comprehensive financial details of the decade-old company for the first time. The firm also spent $457 million (£350m) investing in self-driving cars, flying taxis and other technologies in last year alone (stock0

Uber has long struggled to turn an annual profit, although it has tipped over the line briefly in some of its quarterly reports.   

The latest disclosure revealed just how far Uber remains from turning a profit, with the company cautioning it expects operating expenses to 'increase significantly in the foreseeable future' and it 'may not achieve profitability.'

Uber lost $3.03 billion (£2.3bn) in 2018 and spent a total of $1.5 billion (£1.15bn) in research and development during that period, the S-1 document revealed.

The San Francisco based company, which was started after its founders struggled to get a cab on a snowy night, is hoping that its investment in automated technology will minimise it's reliance on human drivers in the long-term.

Writing in the S-1 papers, a spokesman for the firm said: 'Along the way to a potential future autonomous vehicle world, we believe that there will be a long period of hybrid autonomy, in which autonomous vehicles will be deployed gradually against specific use cases while Drivers continue to serve most consumer demand. 

'As we solve specific autonomous use cases, we will deploy autonomous vehicles against them. 

'Such situations may include trips along a standard, well-mapped route in a predictable environment in good weather.'

Information about Uber's finances were made public as part of an IPO filing ahead of going public on the New York Stock exchange. This image shows a concept for the firm's flying taxi

The S-1 filing underscores Uber's rapid growth in the last three years, attracting 91 million users to its ride lift service. This image shows a model for a potential final design for the Uber flying taxi, which will be known as Uber Air

WHAT IS UBER AIR AND HOW MUCH WILL IT COST?

UberAir is a network of small, electric, aircraft that enable four-person ridesharing flights in densely populated areas. Artist's impression shown

UberAir is a network of small, electric, aircraft that enable four-person ridesharing flights in densely populated areas.

The 'electrical vertical take-off and landing vehicles' (eVTOLs) differ from helicopters in that they are quieter, safer, more affordable, and more environmentally-friendly, Uber claims.

Users will order the aircraft through the Uber app much like they would one of the firm's taxis.

Once they have selected an UberAIR ride, the craft will fly to the nearest 'Skyport' - a series of launch pads spread across the city.

Uber estimates that an all-electric, 200mph (320kph) ride across the skies of Los Angeles will be price-competitive with an UberX trip of the same distance.

Uber predicts that trips from LAX to the Staples Centre during rush hour can be reduced from up to 1 hour 20 minutes on the ground to less than 30 minutes using UberAir.

Its prediction includes UberX transfers to and from UberAir launch pads - the flight over LA itself will take around four minutes, the firm said.

 The plan will rely on a network of ‘Skyports,’ which will allow the VTOL Uber Air craft to take off and land on rooftops across the country

The filing with the U.S. Securities and Exchange Commission revealed Uber had 91 million average monthly active users on its platforms, including for ride-hailing and Uber Eats, at the end of 2018. 

This is up 33.8 per cent from 2017, but growth slowed from 51 per cent a year earlier.

Uber had not disclosed the latest user numbers before, and the figure indicates the scale of the business. 

Although its user base includes customers of other services and ride-sharing, the number is nearly five times the 18.6 million announced by rival Lyft.

Uber in 2018 had $11.3 billion (£8.65bn) revenue, up around 42 per cent over 2017, but below the 106 per cent growth the prior year.

Uber set a placeholder amount of $1 billion (£770m) but did not specify the size of the IPO. 

Reuters reported this week that Uber plans to sell around $10 billion (£7.65bn) worth of stock at a valuation of between $90 and $100 billion (£69 and £76.5bn).

Investment bankers had previously told Uber it could be worth as much as $120 billion (£90bn).

Uber would be the largest initial public offering since that of Chinese e-commerce company Alibaba Group Holding Ltd in 2014, which raised $25 billion (£19bn).

Although Uber is no longer targeting a $120 billion (£90bn) valuation in the IPO, some stock bonuses to Chief Executive Dara Khosrowshahi and other company executives are only triggered when that valuation is reached.

It also shows how a string of public scandals have weighed on its plans to attract and retain riders. That includes the death of a pedestrian in Tempe, Arizona, in March 2018 at the hands of one Uber's self-driving test cars. (pictured in this file photo)

The Volvo SUV was in self-driving mode with a human back-up operator behind the wheel in Tempe when a woman walking a bicycle was hit. Elaine Herzberg, 49, died in hospital. This image shows the vehicle after the crash

HOW DID AN UBER AUTONOMOUS VEHICLE HIT AND KILL A WOMAN IN ARIZONA?

A self-driving Uber vehicle struck and killed a pedestrian in the first death involving a fully autonomous test vehicle on March 19, 2018.

The accident prompted the ride-hailing company to suspend road-testing of such cars in the US and Canada. 

The Volvo SUV was in self-driving mode with a human back-up operator behind the wheel in Tempe when a woman walking a bicycle was hit.

Elaine Herzberg, 49, died in hospital.

Police have said that the victim, 49 year old Elaine Herzberg, stepped out in front of the car suddenly and they do not believe the car was to blame. 

Uber suspended its self-driving vehicle testing in the Phoenix area, Pittsburgh, San Francisco and Toronto.

The testing has been going on for months as car makers and technology companies compete to be the first with cars that operate on their own.

Uber's self-driving car crash that led to the death of a mother-of-two could have been avoided, driverless vehicle experts have claimed.

Cortica, a firm that develops artificial intelligence for autonomous vehicles, has analysed the dash cam video.

The company concludes the car, which failed to brake or swerve before the collision, had enough time to react and potentially save Ms Herzberg's life.

Speaking to CNET, Cortica's CEO Igal Raichelgauz said the firm's self-driving AI system detected Ms Herzberg 0.9 seconds before impact.

At this point the car was around 50 feet (15 metres) away.

He said the autonomous car's cameras and radar system should have had enough time to pick up the pedestrian and react to the situation.

Driverless cars are fitted with a system of cameras, radar and lidar sensors that allow them to 'see' their surroundings and detect traffic, pedestrians and other objects.

An AI computer system then decides what actions the car takes to avoid a collision - a setup that is supposed to work as well at night as during the day.

A top executive for the maker of Lidar sensors used on Uber's self-driving car said she was 'baffled' as to why the vehicle failed to recognise Ms Herzberg.

Uber will follow Lyft in going public.

Shares in its smaller rival closed at $61.01 (£46.7) on Thursday, 15 per cent below its IPO price set late last month, a development which has sent a chilling signal for other tech start-ups looking to go public.

After making the public filing, Uber will begin a series of investor presentations, called a roadshow, which Reuters has reported will start the week of April 29.

The company is on track to price its IPO and begin trading on the New York Stock Exchange in early May.

Uber faces questions over how it will navigate any transition towards self-driving vehicles, a technology seen as potentially dramatically lowering costs but which could also disrupt its business model.

Last year, the ride-hailing giant settled a legal dispute over trade secrets with Google parent firm Alphabet's Waymo self-driving vehicle unit.

Waymo, in its lawsuit, had said one of its former engineers who became chief of Uber's self-driving car project took with him thousands of confidential documents.

Uber revealed in the filing it could have to pay a license fee to Waymo or face a substantial delay to the development of its self-driving technology if the initial assessment of its technology by an independent expert is confirmed.

The expert, installed as part of Uber's settlement with Waymo, has identified on an interim basis certain functions in Uber's autonomous vehicle software that 'are problematic and other functions that are not,' Uber said.

Uber has long struggled to turn an annual profit, although it has tipped over the line briefly in some of its quarterly reports. The latest disclosure revealed just how far Uber remains from turning a profit, however (stock image)

A Waymo spokesperson said: 'This review is on-going and we will continue to take the necessary steps to ensure our confidential information is not being used by Uber.'

One advantage Uber will likely seek to play up to investors is that it is the largest player in many of the markets in which it operates. 

Analysts consider building scale crucial for Uber's business model to become profitable.

In addition to answering questions about Uber's finances, CEO Khosrowshahi will be tasked with convincing investors that he has successfully changed the culture and business practices after a series of embarrassing scandals over the last two years.

Those have included sexual harassment allegations, a massive data breach that was concealed from regulators, use of illicit software to evade authorities and allegations of bribery overseas. Khosrowshahi joined Uber in 2017 to replace company co-founder Travis Kalanick who was ousted as CEO.

Uber said in its filing its ridehailing position in the United States and Canada was 'significantly impacted by adverse publicity events' and that its position in many markets has been threatened by discounts from other ride-hailing companies.

A #DeleteUber campaign surged on social media in 2017 after a public relations crisis, which Uber said in its filing meant hundreds of thousands of consumers stopped using its platform within days.

Uber said its market share fell in most regions last year, although the rate of decline has slowed. 

The company claims more than 65 per cent market share in the United States and Canada, versus Lyft's stated 39 per cent in the United States.

Uber is reserving some shares in the IPO for drivers who have completed 2,500 trips among other criteria.

WHAT TYPE OF FLYING TAXIS COULD WE EXPECT TO SEE IN THE FUTURE?

Advances in electric motors, battery technology and autonomous software has triggered an explosion in the field of electric air taxis.

Larry Page, CEO of Google parent company Alphabet , has poured millions into aviation start-ups Zee Aero and Kitty Hawk, which are both striving to create all-electric flying cabs.

Kitty Hawk is believed to be developing a flying car and has already filed more than a dozen different aircraft registrations with the Federal Aviation Administration, or FAA.

Page, who co-founded Google with Sergey Brin back in 1998, has personally invested $100 million (£70 million) into the two companies, which have yet to publicly acknowledge or demonstrate their technology.

Secretive start-up Joby Aviation has come a step closer to making its flying taxi a reality.

The California-based company, which is building an all-electric flying taxi capable of vertical take-off, has received $100 million (£70 million) in funding from a group of investors led by Toyota and Intel.

The money will be used to develop the firm’s 'megadrone' which can reach speeds of 200mph (321kph) powered by lithium nickel cobalt manganese oxide batteries.

The Joby S2 prototype has 16 electric propellers, 12 of which are designed for vertical take-off and landing (VTOL), which means no runway is needed.

AirSpaceX unveiled its latest prototype, Mobi-One, at the North American International Auto Show in early 2018. Like its closest rivals, the electric aircraft is designed to carry two to four passengers and is capable of vertical take-off and landing

The aircraft takes off vertically, like a helicopter, before folding away 12 of its propellers so it can glide like a plane once it is airborne.  

Airbus is also hard at work on a similar idea, with its latest Project Vahana prototype, branded Alpha One, successfully completing its maiden test flight in February 2018.

The self-piloted helicopter reached a height of 16 feet (five metres) before successfully returning to the ground. In total, the test flight lasted 53 seconds.

Airbus previously shared a well-produced concept video, showcasing its vision for Project Vahana.

The footage reveals a sleek self-flying aircraft that seats one passenger under a canopy that retracts in similar way to a motorcycle helmet visor.

Airbus Project Vahana prototype, branded Alpha One, successfully completed its maiden test flight in February 2018. The self-piloted helicopter reached a height of 16 feet (five metres) before successfully returning to the ground. In total, the test flight lasted 53 seconds

Like Joby Aviation, Project Vahana is designed to be all-electric and take-off and land vertically.

AirSpaceX is another company with ambitions to take commuters to the skies.

The Detroit-based start-up has promised to deploy 2,500 aircrafts in the 50 largest cities in the United States by 2026.

AirSpaceX unveiled its latest prototype, Mobi-One, at the North American International Auto Show in early 2018.

Like its closest rivals, the electric aircraft is designed to carry two to four passengers and is capable of vertical take-off and landing.

AirSpaceX has even included broadband connectivity for high speed internet access so you can check your Facebook News Feed as you fly to work.

Aside from passenger and cargo services, AirSpaceX says the craft can also be used for medical and casualty evacuation, as well as tactical Intelligence, Surveillance, and Reconnaissance (ISR).

Even Uber is working on making its ride-hailing service airborne.

Dubbed Uber Elevate, Uber CEO Dara Khosrowshahi tentatively discussed the company’s plans during a technology conference in January 2018.

‘I think it’s going to happen within the next 10 years,’ he said.

https://www.dailymail.co.uk/sciencetech/article-6913621/Uber-reveals-91-mln-users-cautions-profitability-IPO-filing.html