The days of summoning a cab by sticking your arm out into streaming traffic may be coming to an end, but early mover Hailo isn’t quite reaping the rewards of the taxi app revolution. The London-based app reported a loss of £21.6m in 2013 in Companies House filings – up from £7.6m in 2012.
For those who prefer to drive or take public transport, Hailo is a location-based mobile app that matches passengers to registered drivers. It’s hurting because of heavy competition from California startup Uber, which controversially allows private cars to take part in the service. Critics (mostly black cab drivers and very probably Hailo) complain this gives them an unfair advantage by bypassing regulation.
Hailo has already retreated from the US market this year, as intense competition there made it unprofitable, and now the market’s getting crowded here too. It’s not all bleak for the startup co-founded by three London taxi drivers in 2011 though. The value of bookings nearly quadrupled from £21m to £80m, as more and more people use taxi apps generally. Revenues rose from £1.5m to £6.3m.
The loss largely came from £25m of administrative costs. In a statement with its results, Hailo said it was continuing to build ‘strong consumer and driver relationships’ and ‘brand loyalty based off the reliability of the taxi service’. The losses were ‘purposefully unprofitable’ (words to make any CFO cry), as the firm invests in its technology, infrastructure and launches in new cities.
To continue its expansion (and presumably eventually get into the black), the firm will need more investment. Given the rapid expansion of the sector, it could well achieve this, but investors may want to know first how it plans to deal with cut-price Uber, and with that in mind how it's performed this year. Marketing boss Gary Bramall told the Independent that Hailo had a strong 2014, but declined to comment on numbers. One might imagine bookings would be up, but the bottom line's anyone's guess.
Find out what it was like launching a startup on a warship and what selling time shares teaches you about business - read MT's profile of Hailo co-founder Caspar Woolley.