UberFreight: Slowing Growth in Q4

UberFreight hits the second growth speed bump, with growth flatlining compared to the previous quarter. A bigger issue for VC backed transport companies?

I’ve been keeping tabs of UberFreight’s performance over the last few quarters. The company published its fiscal year 2019 results yesterday, so it is time to update the analysis.

Revenue Growth Slows Down

Revenue growth has effectively come to a halt. After grossing $218m in Q3, Q4 came in at $219m. This is the second time UberFreight’s revenue growth has plateaued having done so Q3, 2018 - Q1, 2019 previously.

Uber Freight Quarterly Revenue

UberFreight thus has not cracked the $1bn mark yet, neither annualized nor in the last twelve months.

Trucking had a challenging fourth quarter, with many players reporting considerable pressure on pricing while showing modest volume gains. I expect that the overall industry growth quarter on quarter has been around -1%, meaning that UberFreight marginally outperformed the industry.

Marginal outperformance though, has never been the goal for UberFreight, and it’s tough to view the top-line result as anything but disappointing. Digital freight platform competitor Convoy, unfortunately, does not provide any revenue numbers. Still, I’d be interesting to see whether the slowdown in growth is UberFreight intrinsic, or shared by their immediate competitors.

Costs are down

Putting cost control and Uber into the same sentence is always challenging. UberFreight has had a history of spending substantially above its more established peer group. That is still true, but the extent of it has dropped. The business has had an operating loss of $55m in the quarter, which is down from an $88m loss the quarter before. You have to admire the companies ability to spend.

Uber Freight Excess Spend compared to industry peers

Adjusting the loss for the expected margin UberFreight’s traditional competitors generates, it has spent $69m more to the industry than traditional brokers have for a similar sized business. That’s a staggering number, but a staggering number that is coming down from almost $100m in the quarter before.

Outlook

Given this level of spending, it is hard to believe that UberFreight’s subdued growth is due to a lack of capital allocated to the business. The questions thus are:

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