Uber sells $500M stake in its freight business as the ride-hailing giant works to conserve cash
One year ago, Uber’s business model could be categorized as an “all of the above approach,” a strategy to generate revenue from all forms of transportation, including ride-hailing, micromobility, logistics, and package and food delivery.
The COVID-19 pandemic upended that business strategy prompting Uber to offload its shared micromobility unit Jump, double down on delivery with its acquisition of Postmates, and now, to sell a stake in its growing, but still unprofitable logistics arm Uber Freight.
Uber said Friday that an investor group led by New York-based investment firm Greenbriar Equity Group has committed to invest $500 million in a Series A preferred stock financing for Uber Freight . The deal values the unit at $3.3 billion on a post-money basis. Greenbriar managing partners Michael Weiss and Jill Raker will join the Uber Freight board. Uber didn’t name the other investors.
Uber said it will maintain majority ownership in Uber Freight and will use the funds to continue to scale its logistics platform, which helps truck drivers connect with shipping companies.
Uber Freight launched in 2017. In August 2018, it was spun off into a separate business unit, a move that simultaneously allowed it to gain momentum and burn more cash. After spinning off of Uber, the freight company underwent an expansion. Uber Freight redesigned its app, an improvement that included adding new navigation features to make searching for and filtering loads easier to customize.
The company expanded to Canada and Europe. Uber Freight also established a headquarters in Chicago as part of its parent company’s broader plan to invest more than $200 million annually in the region, including hiring hundreds of workers. Last September, Uber said it would hire 2,000 new employees in the region over the next three years; most would be dedicated to Uber Freight.
More recently, Uber Freight signed on new API integration partnerships with cloud TMS providers, including SAP, Blue Yonder, BluJay, MercuryGate, and Oracle. The company also expanded its enterprise software offering with the launch of Uber Freight Enterprise and Uber Freight Link. Not all of its growth worked out. Uber pulled out of Europe and this month sold off its business there to Berlin-based sennder in an all-stock transaction.
The business unit has experienced a jump in revenue. Still, that growth hasn’t translated into a profit. Uber Freight took in $211 million in revenue in the second quarter of 2020, a 27% increase from the same period last year. Uber Freight reported an adjusted net loss of $49 million in the second quarter, a slight improvement from the $52 million loss in the same period in 2019.
The investment with Greenbriar is being couched by Uber Freight CEO Lior Ron as the company’s “next chapter.”
“We are tremendously proud of what we have accomplished in a few short years. We have led the industry with technology, transforming dated and analog processes to ensure that both shippers and carriers are equipped to succeed in a rapidly changing industry,” Ron said in a statement, adding that Greenbriar is a partner “with deep expertise and a shared passion for simplifying logistics.”