Uber is currently facing a lot of competition with India-based cab aggregator rival Ola, in Australia. However, the global leader in the ride-hailing market’s CEO, Dara Khosrowshahi, reportedly stated that the company will keep investing in its products and technology in emerging markets such as India and Middle East.
In an email sent to his employees, the recently appointed CEO stated that the company’s core business has been achieving well and saw the number of trips on the platform increase by 43% while bookings also rose by 55% to $11.3 Bn year-on-year. He further expressed that the company’s net revenue grew by 67% to reach $2.5 Bn while it was able to cut losses by half compared to the previous year.
We are deliberately reinvesting our profits. Even with these impressive results, we’re not going to let up on the gas. We expect to reinvest our profits back into our products and tech, emerging markets like the Middle East and India, as well as big bets like scaling Eats and JUMP globally,
the CEO shared.
He also informed his employees that the company is planning a secondary stock sale for Uber’s employees and existing investors.
“…a new third-party tender offer led by Coatue, TPG, and Altimeter Capital will launch next week. Eligible employees will be able to sell shares to these investors at $40 per share, which implies a valuation of approximately $62 Bn,” Khosrowshahi said.
The Uber Chief also affirmed his intention of further investing in India, but is looking for ways of an “eventual profitability” as it looks to scale up its services.
Challenges Faced by Uber Lately
Ola has recently forayed the Australian market offering 20% less commission on their trips compared to Uber, therefore stealing important customers from the US-based giant in one of its most important and lucrative markets.
Additionally, a few months ago, Uber took the painful decision to exit the Southeast Asian market by selling its Southeast Asian operations to Grab and taking a 27.5% stake in the rival’s company. This was not the first time that the US giant conceded defeat to a local rival. In August 2016, the Silicon-Valley-based firm left one of the world’s biggest emerging markets, China, selling its business to rival Didi Chuxing. In July 2017, the company exited the Russian market when it announced a $3.7 Bn merger deal with its Russian rival Yandex.Taxi.
As for India, it currently represents the company’s top three markets (US, Latin America, India) and has therefore been pouring colossal amount of funds to run and grow its operations in the country. Filings with the Registrar of Companies reveal that in July last year, Uber invested $7.99 Mn in its Indian unit. However, while the company is really fighting for market share in the country, it is only operational in 29 cities, while arch-local-rival Ola operates in over 90 cities.