SAN FRANCISCO — Uber, the ride-hailing service that has upended transportation around the world, took a major step toward the largest initial public offering in years when it officially unveiled its finances in a prospectus on Thursday.
The offering, which could value Uber at around $100 billion, is expected to reverberate through global financial markets and to solidify the company’s position as one of the most consequential technology firms of the past decade. The share sale would be the biggest since the Alibaba Group of China began trading on the New York Stock Exchange in 2014, and would peg Uber’s value at more than four times that of United Airlines’ parent and double that of FedEx.
But the prospectus renewed questions about how sustainable Uber’s business actually is. The company said in the filing that it lost $1.8 billion in 2018, excluding certain transactions, on revenue of $11.3 billion. And the prospectus also showed that its rocket-ship trajectory for revenue growth was beginning to slow.
Uber’s archrival in North America, Lyft, went public last month at a valuation of $24 billion. But Lyft, which is also deeply unprofitable, fell below its offering price in its second day of trading as investors questioned whether it could make money. This week, Pinterest, the digital pin board company that also is losing money, set a price range for its public offering that values it below that of its last private market peg.
[Comparing Uber and Lyft, in four charts.]
One potentially major concern for Uber is that it does not appear set to turn a profit in the near future. In the United States, the company is burning cash as it battles Lyft, cutting prices for passengers and spending to recruit drivers. In other parts of the world, Uber also provides discounts to riders and incentives to drivers as competitors like Ola fight for market share. And the company is investing heavily in businesses like food delivery and scooters.
“We will not shy away from making short-term financial sacrifices where we see clear long-term benefits,” Dara Khosrowshahi, Uber’s chief executive, wrote in a letter accompanying the prospectus.
To lessen the surprise of its losses when it did finally go public, Uber has disclosed its quarterly results for two years even though, as a privately held company, it was not obligated to do so. Still, the prospectus invites new scrutiny.
[Here is a glossary to help make sense of Uber’s jargon.]
Uber did not disclose in the filing the valuation it is seeking from public investors; it was last valued at $76 billion in the private market. Its offering is being led by Morgan Stanley and Goldman Sachs. The company’s shares are set to begin trading next month on the New York Stock Exchange under the symbol UBER.
In its filing, Uber said it made a profit of $997 million in 2018, largely from selling parts of its business in places like Southeast Asia and Russia. Excluding those gains, plus other items, Uber lost $1.8 billion for the year. In 2017, its net loss totaled $4 billion.
Revenue growth also slowed. In 2018, its revenue rose 42 percent to $11.3 billion from a year earlier. But revenue in 2017 had more than doubled from 2016. Uber revealed in the prospectus that it is heavily dependent on just five cities for nearly a quarter of its total bookings: Los Angeles, New York, San Francisco, London and São Paulo, Brazil.
Its number of monthly users, who turn to Uber for not only rides but also services like food delivery, was 91 million in 2018, up 34 percent from a year earlier. But user growth, which had risen 51 percent in 2017, also slowed.
At the same time, Uber’s spending continues to rise, reaching $14.3 billion last year, up 19 percent from 2017.
While revenue growth in its ride-hailing business slowed, its food delivery service, Uber Eats, is soaring. Revenue from Uber Eats nearly tripled to $1.5 billion in 2018 from $587 million a year earlier.
Founded by Garrett Camp and Travis Kalanick in 2009, Uber began as an on-demand black car service for wealthy clients, riding the wave of mobile-technology innovation that followed Apple’s introduction of the iPhone in 2007. Mr. Camp conceived of the service, initially called UberCab, because of the difficulties he had hailing a taxi in San Francisco.
Silicon Valley tech workers were quick to embrace Uber, but it wasn’t until around 2013 that the service took off more broadly. That year, Uber introduced UberX, a low-cost ride-sharing service that allowed anyone with a car and a license to drive for the company on a freelance basis. UberX was a hit, and the company expanded rapidly elsewhere, often by flouting local and state transportation laws.
Under the leadership of Mr. Kalanick, who was chief executive, Uber also increased its footprint internationally. It now operates in more than 63 countries and 700 cities around the world. Uber completes more than 15 million trips a day.
Amid its explosive growth, the company stumbled in 2017 when a series of legal and ethical scandals resulted in a boardroom coup that led to Mr. Kalanick’s ouster. After trying to regain power for months, Mr. Kalanick has since moved on to a new start-up, City Storage Systems, which is focused largely on real estate.
Uber acknowledged the toll of what unfolded in 2017 in its prospectus. The company said it lost hundreds of thousands of users in just a few days during a #DeleteUber social media campaign that year. It said it still suffered from a perception that Uber is a toxic place to work. And the company continues to deal with investigations by the Justice Department and foreign government agencies over its past business practices.
Since late 2017, Uber has been led by Mr. Khosrowshahi, a former chief executive of Expedia. The company has expanded beyond its original ride-hailing mission and is experimenting with scooters, bike-sharing and other alternative forms of transportation. It has also invested in Uber Eats and is beefing up Uber Freight, its long-haul-trucking division.
“What began as ‘tap a button, get a ride,’ has become something much more profound,” Mr. Khosrowshahi said in his letters.
The company has tried stemming some of its losses, including by selling some of its businesses in China, Russia and Southeast Asia. It recently acquired Careem, its primary rival in the Middle East, for $3.1 billion, partly to help ease a fierce price competition in the region. It has also sought new investment from the Japanese telecommunications conglomerate SoftBank to support its development of autonomous vehicles.
Uber has also had to answer persistent questions about the status of its drivers, who as independent contractors are ineligible for employee benefits like health care. That saves Uber money.
The company said in its prospectus that the possibility it may someday be forced to recognize its drivers as employees was an existential threat to its business. “Any such reclassification would require us to fundamentally change our business model,” Uber said.
More than 60,000 drivers have filed or told Uber that they intend to file arbitration cases against the company, claiming that they were misclassified as independent contractors, the company said.
The company said in its filing that it intended to award cash bonuses to more than 1.1 million drivers in the United States. The bonuses range from as little as $100 up to $10,000, based on how many trips the driver has completed. Drivers will be able to use the bonuses to purchase Uber stock at its I.P.O. price.
The biggest winners from Uber’s public offering will be its founders and early investors, who own large chunks of company stock. According to the prospectus, the biggest shareholders are SoftBank, which owns 16 percent of Uber; the venture capital firm Benchmark, which owns 11 percent; Saudi Arabia’s Public Investment Fund, which owns 5 percent; Alphabet, which owns 5 percent; and Mr. Kalanick, who owns 9 percent.
Eric Paley, a managing partner at Founder Collective, a venture firm that invested in Uber in 2010, said the company would inspire the next generation of entrepreneurs to change any industry.
“Uber was started in the depths of the financial crisis, catered to a then-non-existent market, and still, in the space of a decade, has changed the way cities work across the globe,” he said.
