Uber reports a $1 billion loss in the first quarter

Uber Technologies Inc incurred a $1 billion loss in the first quarter, with most of it attributed to heavy spending on growth in the company’s freight and food delivery businesses. Revenues reportedly went up 20%, in Uber’s first quarterly report since its IPO.

The company’s reported revenue of $3.1 billion matched its quarter forecasts as did the $1.0 billion loss, which compared to a forecast of between $1.0 billion and $1.11 billion.

The report shows that the company hit its financial targets. Uber shares surged 2.6% after a conference call, with CEO Dara Khosrowshahi calling 2019 an “investment year.”

Heavy spending ahead of the IPO contributed to costs in the quarter going up by 35%, the company reported.

Gross bookings, which measure the total value of Uber rides before costs on drivers are factored in, reached $14.6 billion and were up 34% compared to a year ago. But bookings rose just 3.4% compared to the previous quarter, indicating that recruiting new riders continues to prove challenging in flooded markets.

Uber’s net loss in the first quarter stood at $1.01 billion, or roughly $2.26 per share, while net income was $3.75 billion or $1.84 per share in the same period a year earlier.

The Silicon Valley firm’s net loss in the fourth quarter was $887 million while revenue stood at $2.97 billion.

The company had previously projected that its first-quarter revenue would be between $3.04- $3.1 billion, with seven analysts in a Refinitiv IBES poll forecasting $3.04 billion in expected revenue.

Uber went public recently, with its listing coming at a time the global stock market faced a sustained sell-off due to the escalation of U.S.-China trade tensions.

The company has also faced growing competition from rivals across the world, including Lyft that also went public this year. Conflicts with drivers over wages and other employment demands and regulatory battles in several countries have also hit the ride-hailing firm.

But CEO Khosrowshahi thinks that Uber will benefit from two growth levers in the mature U.S. market. The firm is looking to expand its rides into the suburbs as well as bank on the generational wave that sees millennials really not interested in owning cars.