Uber Lays Groundwork for IPO

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Uber filed documents signaling its intent to conduct an initial public offering.

Uber filed documents signaling its intent to conduct an initial public offering.


Photo:

Laura Dale/Zuma Press

Uber Technologies Inc. filed paperwork confidentially this week for its initial public offering, according to people familiar with the matter, as it races with smaller rival Lyft Inc. to be the first to market.

The S-1 filing with the Securities and Exchange Commission puts Uber neck-and-neck with Lyft. Both planned IPOs are shaping up to be among the biggest in a spate of offerings aimed for 2019. Lyft said Thursday it had filed its S-1, and people familiar with the matter have said it is aiming to debut in March or April.

Uber’s filing indicates it could go public as soon as the first quarter, as The Wall Street Journal reported in October. That would be sooner than many observers had expected. Uber Chief Executive Dara Khosrowshahi has said he expected to seek a debut in next year’s second half.

Uber has dubbed planning around its IPO “Project Liberty,” according to one of the people familiar with its plans.

That may be a sly reference to the thousands of employees and investors who have waited years to sell their full stake in the company for a profit, one person said. Uber has held recent secondary sales, allowing some investors and workers to sell a portion of their stakes.

Details of Uber’s filing, including exactly when it was submitted, weren’t immediately available. The company’s banking advisers have suggested the ride-hailing firm could go public at a valuation of $120 billion, the Journal has reported. The firm’s most recent private valuation was $76 billion, when it sold a roughly $500 million stake to Toyota.

Based on the pipeline of potential IPOs, which includes data-mining company Palantir Technologies Inc., Slack Technologies Inc. and Airbnb Inc., 2019 could be a record-breaking year for market debuts in terms of dollars raised. It could top the high-water mark reached in 2000, when tech companies raced to cash in on lofty valuations at the height of the dot-com boom.

Uber and Lyft, along with companies outside the U.S. like China’s Didi Chuxing Technology Co. and Singapore’s Grab, have radically changed the way people get around in urban areas and have upended traditional cab businesses. The companies have leveraged their core businesses to expand into other services, like meal delivery and bike sharing.

But Uber, like Lyft, is unprofitable. Its third-quarter loss widened to $1.07 billion amid a sales gain of 38% to $2.95 billion, and it has indicated in recent bond-offering documents it doesn’t expect to get out of the red for at least three years. Lyft had a loss of $254 million on sales of $563 million in the most recent quarter, the Journal has reported.

Lyft has raised $5.1 billion to date, compared with about $20 billion for Uber. Both figures include debt financing. Uber has 20,000 employees world-wide, which is four times more than Lyft has.

For its presentations to potential investors, Uber is likely to emphasize the success of its side projects such as prepared-food-delivery unit UberEats and trucking business Freight, people familiar with the matter have said. It operates in about 70 countries world-wide, while Lyft is just in the U.S. and Canada.

Uber had 69% of the U.S. market, while Lyft had 28% as of October, according to Second Measure, which tracks credit-card spending data.

Mr. Khosrowshahi has put IPO planning at the forefront of his work in recent months. Among recent hires are the company’s first chief financial officer in more than three years, a new chairman and a chief compliance officer.

Uber is also weighing strategic transactions ahead of the IPO, including mergers and acquisitions, that could push out the timeline by several months, people familiar with matter said. Mr. Khosrowshahi and Uber expect that these deals, should they come together, could boost the valuation in the offering, these people said.

Uber last year weathered a series of scandals and setbacks, including claims of workplace sexual harassment, the alleged theft of self-driving-car trade secrets and several federal investigations into its business practices. Investors forced out co-founder Travis Kalanick as CEO, ushering in Mr. Khosrowshahi from

Expedia Group
Inc.

On his first appearance in front of employees in August 2017, Mr. Khosrowshahi addressed his plans to go public, saying it could happen in as little as 18 months. The recent filing suggests the company is on pace with that guidance.

Investors have privately praised Mr. Khosrowshahi for taking a more collaborative approach with regulators, after early wins in London and Brazil where Uber’s business was threatened by new rules.

Uber is still investing heavily in its self-driving-car division, which cost about three-quarters of a billion dollars to operate in 2017. After a fatal accident in March involving one of the robot vehicles, Uber has taken the vehicles off the roads, closed its operations in Arizona and cut staff in other offices, including Pittsburgh. It has a pending application to return the high-tech autos to roads in Pennsylvania.

Although Mr. Khosrowshahi has pledged his support for continued investment in self-driving vehicles, some investors and executives have urged him to further cut spending or dispatch the division.

Write to Greg Bensinger at greg.bensinger@wsj.com and Maureen Farrell at maureen.farrell@wsj.com