When Uber CFO Brent Callinicos left the company in 2015, he created a vacancy that has cast a shadow over the company for the past three years.
Now, after a series of fits and starts in the search for a viable candidate, the company has finally hired a CFO. Nelson Chai, most recently the CEO of insurance firm The Warranty Group, will be tasked with stewarding the company’s initial public offering Uber executives have slated for late 2019.
Finding someone to take on the coveted albeit demanding role over the last year or so has been challenging. Under Uber CEO Dara Khosrowshahi, the company has gotten close to securing a candidate at least twice, several sources told Recode. Most recently, the company had made an offer to VMware CFO Zane Rowe but Rowe declined the offer, Recode confirmed. The Wall Street Journal first reported the talks. The reasons Rowe declined are not clear.
That struggle is not a new one, however. Both board members and top staffers have called former CEO Travis Kalanick’s inability, often described as outright hesitance, to replace Callinicos into question, sources have told Recode. Former Uber board member and Benchmark partner Bill Gurley, for instance, has been the most vocal about the need for companies to go public.
Chai’s selection serves as an unofficial kickoff for the battle on Wall Street to take Uber public. Top-tier banks are preparing to spend 2019 competing with one another to win the Uber IPO deal. They have been watching the Uber CFO search closely, and it’s little surprise that at least some bankers got an advance heads-up about Chai’s appointment, one source told Recode.
Before The Warranty Group, Chai served as the president and CEO of CIT Bank and EVP and CFO of Merrill Lynch. His lack of any clear ties to Goldman Sachs, Morgan Stanley or JPMorgan Chase removes any consideration that a new CFO could bring a favorite son and create an unlevel playing field among the big three banks.
Reeling in Uber’s financials is no small task. The company’s sales growth is slowing and CEO Dara Khosrowshahi is investing the profits Uber does make off its rides and food-delivery businesses into expanding new and existing businesses like scooters, bikes and international operations in places like India and the Middle East. That investment amounted to close to $900 million in losses, though that’s down 16 percent from a $1.1 billion loss in the same period a year ago.
While Uber is privately held, the company provides detailed financial information. In that same period, Uber reported that it generated $2.8 billion in revenue, a nearly $1.1 billion increase over the same period a year ago, representing 63 percent growth. (That’s down from 70 percent year-over-year growth in the first quarter.)
It’s not exactly a surprise that the company continues to lose cash. Uber executives have been vocal about their plans to pour funds into new viable growth opportunities while continuing to build out existing revenue streams.
Hiring a CFO may have been challenging for the close-to-$70 billion company but Chai has his work cut out for him.
Chai has a year to take Uber’s money-losing rides business and turn it into a profitable company ready to trade on the public markets. But the company is facing pressure on a number of fronts. In addition to facing off against strong competitors in most of its major markets — including the U.S., India and the Middle East — Uber continues to face regulatory issues in a number of countries while being forced to re-litigate regulatory battles in cities the company has thus far been free to operate in, such as New York.
Additional reporting by Theodore Schleifer.
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