Uber Announces Results for Fourth Quarter and Full Year 2019(investor.uber.com)
investor.uber.com
Uber Announces Results for Fourth Quarter and Full Year 2019
https://investor.uber.com/news-events/news/press-release-details/2020/Uber-Announces-Results-for-Fourth-Quarter-and-Full-Year-2019/default.aspx
10 comments
Did they put that much up for insurance though? The delta between 18 and 19 is only about $200M.
Uber also tripled it's R&D budget, which may be a good sign for the company, but it looks like it's primarily stock-based compensation.
Uber also tripled it's R&D budget, which may be a good sign for the company, but it looks like it's primarily stock-based compensation.
> Airport business outgrows overall Rides - In Q4 2019 our Airport business outgrew overall Rides. We now serve over 650 airports globally and continue to see our airport riders prefer our premium products. In 2020, we will continue to roll out our PIN product (riders receive a PIN and take it to the driver next in line rather than seeking out a specific driver), which has been well-received by riders and by airports.
Didn’t realize Airports would be such big business.
Overall it seems Uber is growing >20% in rides, trips and active users.
I remember when Facebook was valued at 100B without profits and I thought it was absurd. Now they’re a money raining machine with 500B valuation.
Year 2019
Total trips: 6.9 Billion Total bookings: $65 Billion Net revenue: $12.8 Billion
So they’re taking ~20% cut from every trip.
If Uber can reduce burn and be profitable this year, I’m willing to bet $1000, they’ll be >100B by end of 2021.
Uber eats and freight grew 70%. Wow!
Overall I think if Uber can maintain their market dominance for another decade or so while self driving cars really become viable and people trust them, I can see Uber easily being as large as Facebook.
Didn’t realize Airports would be such big business.
Overall it seems Uber is growing >20% in rides, trips and active users.
I remember when Facebook was valued at 100B without profits and I thought it was absurd. Now they’re a money raining machine with 500B valuation.
Year 2019
Total trips: 6.9 Billion Total bookings: $65 Billion Net revenue: $12.8 Billion
So they’re taking ~20% cut from every trip.
If Uber can reduce burn and be profitable this year, I’m willing to bet $1000, they’ll be >100B by end of 2021.
Uber eats and freight grew 70%. Wow!
Overall I think if Uber can maintain their market dominance for another decade or so while self driving cars really become viable and people trust them, I can see Uber easily being as large as Facebook.
Facebook is a software business. Its cost for acquiring new users is zero, and every new user makes them money. Uber is a traditional company with traditional expenses that wants you to believe it’s a software company. Big difference.
Not buying that argument. Facebook just ran a Super Bowl ad, which cost over $10 million just for 60 seconds of airtime (plus who knows how much they paid for production and celebrities). That's part of user acquisition. And it certainly doesn't cost zero to attract advertisers (especially large corporate ones) who actually provide revenue.
In both cases, they are so ubiquitous that they aren't really after new users, just increased engagement/usage. And I'd bet Uber's per-user usage growth exceeds Facebook's right now.
In both cases, they are so ubiquitous that they aren't really after new users, just increased engagement/usage. And I'd bet Uber's per-user usage growth exceeds Facebook's right now.
It was also their first super bowl ad ever, so they grew to their size without needing big ads.
The message of that ad has nothing to do with introducing their product to the five remaining people on Earth who do not know about FB. The message of that ad is, "Hi we're Facebook, sorry about the whole election thing, oh and please do not regulate us."
As a frequent business traveler, airport transportation is my primary use of Uber/Lyft.
It would be a lot higher percentage if I didn't just use a pre-arranged private car for my home airport. (I live far enough outside the city that Ubers for early-morning pickups, especially for an hour drive into the city, are very thin on the ground.) It would probably also be higher if fewer cities I traveled to had decent transit in from the airports.
But, otherwise, I have pretty much zero reason to use Uber/Lyft/taxis day-to-day.
I spend a few thousand dollars a year on airport transportation but very little of that goes to Uber.
It would be a lot higher percentage if I didn't just use a pre-arranged private car for my home airport. (I live far enough outside the city that Ubers for early-morning pickups, especially for an hour drive into the city, are very thin on the ground.) It would probably also be higher if fewer cities I traveled to had decent transit in from the airports.
But, otherwise, I have pretty much zero reason to use Uber/Lyft/taxis day-to-day.
I spend a few thousand dollars a year on airport transportation but very little of that goes to Uber.
> Didn’t realize Airports would be such big business.
Typically, I can expense rides to and from airport if I'm traveling for work, so I can be more generous and order a better car.
Typically, I can expense rides to and from airport if I'm traveling for work, so I can be more generous and order a better car.
That and the auto-emailing of a receipt in $YourLanguage billed in $YourCurrency makes expensing it a breeze.
Dunno why the receipts are ~500kb though.
Dunno why the receipts are ~500kb though.
Curious, and again, I'm no expert. Uber Freight grew at 100%+ but what was the cost of capital, and what were the margins? A company out of Florida called Arrive logisitcs is the size of Uber Freight, old school company, and they also grew at that rate.
The argument with FB is diff, FB relies on network effects and a social graph, literally winner take all, you could argue that exists in localized taxi markets, but again, I think of Warren Buffet and "the cirlce of competence". How many investors are reading CH Robinsons annual reports and comparing said numbers? Just some thoughts. Remember, interest rates and capital markets the way they are today, may not be the way they are tomorrow. - WB
The argument with FB is diff, FB relies on network effects and a social graph, literally winner take all, you could argue that exists in localized taxi markets, but again, I think of Warren Buffet and "the cirlce of competence". How many investors are reading CH Robinsons annual reports and comparing said numbers? Just some thoughts. Remember, interest rates and capital markets the way they are today, may not be the way they are tomorrow. - WB
@nojvek
I’m no expect and very much speculating too.
My appreciation from Uber comes from my Travels. While Uber faces significant competition in US with lyft for rides, DoorDash, caviar, etc for food delivery, Convoy and tons of other companies for Freight, they are a global company.
I use the same Uber app for US, Australia, Dubai, Kenya, India. In a whole bunch of countries they’ve bought out the competition e.g Careem in Dubai and they’re operating like a monopoly. Multiple brands but Uber still owns the big pie.
They’re running operations at a massive scale. The operational costs bring customer support, software ops. Looks like a software company that way. They don’t own cars and drivers are contractors (sure changing in California) but remember Uber is a global company. A decent chunk of their revenue is non-US.
They may be negative in acquiring new drivers and customers but for their active base, they make a decent profit.
Freight right now is a very paper/pen based inefficient business with a bunch of middlemen. Uber is making that efficient just as they did to Taxis.
Let’s see how this all plays out but I am somewhat bullish on them.
My appreciation from Uber comes from my Travels. While Uber faces significant competition in US with lyft for rides, DoorDash, caviar, etc for food delivery, Convoy and tons of other companies for Freight, they are a global company.
I use the same Uber app for US, Australia, Dubai, Kenya, India. In a whole bunch of countries they’ve bought out the competition e.g Careem in Dubai and they’re operating like a monopoly. Multiple brands but Uber still owns the big pie.
They’re running operations at a massive scale. The operational costs bring customer support, software ops. Looks like a software company that way. They don’t own cars and drivers are contractors (sure changing in California) but remember Uber is a global company. A decent chunk of their revenue is non-US.
They may be negative in acquiring new drivers and customers but for their active base, they make a decent profit.
Freight right now is a very paper/pen based inefficient business with a bunch of middlemen. Uber is making that efficient just as they did to Taxis.
Let’s see how this all plays out but I am somewhat bullish on them.
>So they’re taking ~20% cut from every trip.
What I'm reading is I can order an Uber to two blocks away and say to the driver that I actually want to go to the other side of town, Uber says it's 50$ from which he'll get 40$, so how about I pay him 45$ in cash. We both win.
What I'm reading is I can order an Uber to two blocks away and say to the driver that I actually want to go to the other side of town, Uber says it's 50$ from which he'll get 40$, so how about I pay him 45$ in cash. We both win.
You're a genius. Were you previously unaware that Uber took a cut of the revenue?
Uber takes 25% service fee. I guess others things like credit card processing and misc expenses may bring that down to 20%.
It’s still good to see that 20% number on their earnings report.
It’s still good to see that 20% number on their earnings report.
RE: eats incentive spend. Its a cash bonfire with Doordash and UE competing domestically, and a lot of other softbank funded delivery groups including uber eats competing in south america. It seems like that late stage financing has dried up so likely to see rationalization in this vertical.
At least with ride hailing we got cheap, convenient rides for a subsidized price.
For food delivery, we get overpriced (upcharged) food, plus a delivery fee, for cold food that takes forever to show up.
For food delivery, we get overpriced (upcharged) food, plus a delivery fee, for cold food that takes forever to show up.
It really does amaze me how much worse the delivery experience has gotten in the last few years. Prices are way up, and the additional complexity means deliveries are less reliable and less predictable. Which makes a lot of sense, really. If a restaurant advertised delivery previously, they had delivery employees and treated it like an important aspect of their experience. Now it's really not clear who, if anybody, is responsible for ensuring a good experience.
I use UE more than I care to admit and while the prices can suck the only weirdness I've seen is people lie about riding bikes, a lot.
I think there's an incentive for bike riders so I don't report it (not like they're paid well anyway) but it is odd.
I think there's an incentive for bike riders so I don't report it (not like they're paid well anyway) but it is odd.
I think bike riders get extra information about orders (presumably so they can refuse orders that they can't carry), but obviously car drivers would like that information too.
This is just based on my recollection from a friend of mine doing Postmates a few years back.
This is just based on my recollection from a friend of mine doing Postmates a few years back.
In a competitor app, I’m guessing it’s the same for Uber, bikers got paid more per mile because it was assumed to take longer. Also, bikers dont need proof of car insurance
I noticed the bike thing when traveling to NYC recently. I assumed it had something to do with the city's utilization bill not applying to bikes.
Delivery is now just a pass-the-buck system. Delivery companies blame riders who blame restaurants who blame delivery companies again. I'm not sure if this is something that can sustain once the discount gravy train runs dry.
Uber is responsible for the delivery experience, the restaurant is responsible for the food experience.
As any restaurant cook can tell you that there's a lot of steps they have no control over that directly impact food experience.
This hasn't been my experience at all. Granted, I try to order from places close to me, but I was shocked at how smooth the transaction was with Uber Eats, and how fresh the food was. Also, little pro-tip: order food that travels well. French-fries are a huge risk, but hot sandwiches/pizza/asian food is great.
I think Radio Lab did an experiment with french fries.
The optimal method of transporting them was to never seal them (!!), turn your car heater on full blast, and put them right in front of a vent.
... if you survive driving a car that smells like french fries, while hungry, apparently they turn out pretty decent.
The optimal method of transporting them was to never seal them (!!), turn your car heater on full blast, and put them right in front of a vent.
... if you survive driving a car that smells like french fries, while hungry, apparently they turn out pretty decent.
You gotta pop the hood of your car and put them on whatever part of the engine is the warmest. There's probably optimization where you cook the fries as you drive.
Yea, so how are the unit costs working out? Why is delivery so costly AND they are losing money? How costly is delivery supposed to be for a company to be profitable (assuming NYC level density).
> Why is delivery so costly
If I live 10 minutes and 2 miles from a pizza place, a round trip is $1 in fuel and depreciation, and $4 salary at minimum wage - if the driver is driving constantly, never has to wait for the food to be ready or sit around waiting for orders to come in.
If the driver sometimes has to wait around for the food to be ready, and there are quiet times at the start and end of the evening, and the driver gets health insurance, holiday/sick leave and a pension, delivery could easily cost $10.
If I live 10 minutes and 2 miles from a pizza place, a round trip is $1 in fuel and depreciation, and $4 salary at minimum wage - if the driver is driving constantly, never has to wait for the food to be ready or sit around waiting for orders to come in.
If the driver sometimes has to wait around for the food to be ready, and there are quiet times at the start and end of the evening, and the driver gets health insurance, holiday/sick leave and a pension, delivery could easily cost $10.
Choice of delivery restaurants is much higher though.
Previously (outside of NYC and other major metro areas) your choices for easy delivery were pizza and.... pizza. Everywhere else either didn't offer delivery, or it was offered on a very ad hoc basis (one employee who might be able to deliver for very large orders, and you had to ring the store, and pay in cash).
Now the majority of restaurants offer delivery, it costs a lot more than domino's pizza but no one cares.
Previously (outside of NYC and other major metro areas) your choices for easy delivery were pizza and.... pizza. Everywhere else either didn't offer delivery, or it was offered on a very ad hoc basis (one employee who might be able to deliver for very large orders, and you had to ring the store, and pay in cash).
Now the majority of restaurants offer delivery, it costs a lot more than domino's pizza but no one cares.
Shows up unpredictably. I can’t fathom how DoorDash stays in business, let alone grows. At least Uber has other businesses with possible network effects.
Too bad the NYC bicycle delivery model doesn’t scale.
Too bad the NYC bicycle delivery model doesn’t scale.
Here in Calgary, Alberta, Canada, we currently have these food delivery services competing, with their own app, exclusive agreements with restaurants, and so on:
- Uber Eats
- DoorDash
- SkipTheDishes
- Foodora
- Fantuan
- HungryEats
And there were at least two more that were previously available but seem to have been acquired: Just Eat (by SkipTheDishes), and Nomme (by DoorDash).
It's ridiculous how many companies are fighting over a market that doesn't even seem to be close to profitable for anyone.
- Uber Eats
- DoorDash
- SkipTheDishes
- Foodora
- Fantuan
- HungryEats
And there were at least two more that were previously available but seem to have been acquired: Just Eat (by SkipTheDishes), and Nomme (by DoorDash).
It's ridiculous how many companies are fighting over a market that doesn't even seem to be close to profitable for anyone.
Exactly, what is the barrier to entry in this market. What are the competitive moats around keeping drivers, and what paradigm shifts might cause this to all turn over on its head. Just some questions.
"Rides produced $742 million in EBITDA, up some 281%"
Time for the narrative of Uber burning VC money/subsidizing rides/selling-$2 bills-for-$1 to die?
Time for the narrative of Uber burning VC money/subsidizing rides/selling-$2 bills-for-$1 to die?
Given you work for you Uber, I don't think it's an accident that you misquoted it and left out a key word: "Adjusted".
They have $742m of "Adjusted" EBITDA, which is a metric they made up to make themselves look good, similar to WeWork's "Community EBITDA".
In the real-world, they lost $1.1B in Q4 and $8.5B for 2019. Revenue is growing and their margins are getting slightly better as they do massive layoffs and raise their prices, but they're still hemorrhaging money.
They have $742m of "Adjusted" EBITDA, which is a metric they made up to make themselves look good, similar to WeWork's "Community EBITDA".
In the real-world, they lost $1.1B in Q4 and $8.5B for 2019. Revenue is growing and their margins are getting slightly better as they do massive layoffs and raise their prices, but they're still hemorrhaging money.
It hasn't been true for a while. On a per-ride basis in their developed service areas they have been profitable for a long time.
And yet they are still losing money. Odd, that.
Because of unrelated, ride-count-independent costs. For example, massively unprofitable self-driving car and food delivery businesses.
Those reasons have nothing to do with Uber being unable to charge more for the rides than the cost to provide, which is not true and a widely held misconception.
An investor should care about "can they make money selling rides". That business unit can always be broken off from orthogonal ventures.
Those reasons have nothing to do with Uber being unable to charge more for the rides than the cost to provide, which is not true and a widely held misconception.
An investor should care about "can they make money selling rides". That business unit can always be broken off from orthogonal ventures.
Depends on who you think of as paying the costs. One of Uber's "innovations" is to get the key capex, cars, off their balance sheet. Along, of course, with major opex contributors like repairs. Instead, those burdens now fall on individual drivers. It's really not clear to me if Uber would be truly profitable if they had to pay a reasonable wage plus the actual costs.
So instead the question becomes how long they can keep exploiting workers like this. AB5 suggests that the answer is not "forever".
So instead the question becomes how long they can keep exploiting workers like this. AB5 suggests that the answer is not "forever".
I have many issues with Uber, but at least in the UK the argument that they’re pushing costs of fuel/repairs on to the drivers isn’t really a valid one. Most taxi drivers in the UK are self-employed, and pay a fee to one of the local cab companies in return for jobs getting pushed out to them, and they’re responsible for all the associated costs of running a taxi and remaining licensed to do so.
So who buys and repairs the cabs? In the US, it's mostly the cab companies. Drivers just have to pay a fixed night's rental, plus fuel. If,say, the transmission fails, the driver just swaps to a different cab; it's the cab company that's on the hook for the thousands in repairs.
Typically the driver does. I’m sure there are a few can firms running there own fleets and leasing them out, but in most cases it’s the driver who has responsibility for everything, right down to paying for the meter to be checked once a year.
I've yet to hear a good argument for how they're exploiting workers. Tons of companies are always hiring yet people chose to work for Uber. Most people hate their job and wish they were paid more but Uber is the only company that will welcome you back with open arms if you don't show up for a month without notice.
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I would suggest Google. There's a ton of discussion around California's AB5 that explains the issues.
Marketing costs in new markets have to be expenses immediately. This isn’t saying they are wildly profitable, just that some traditional metrics miss value in high growth companies.
growth tends to do that.
But what sort of growth are they spending money on - and is what they're spending money on worth it? If you're spending money on free rides, you might be getting users that aren't going to be profitable long term. If you're spending that money on r&d moonshots like developing your own self driving cars, then it's not looking so good for you when tesla/waymo/etc are so much further ahead. And if economies of scale begin working against you, where as you get more and more drivers, they begin to organize and lobby and push to become classified as employees and raise your costs, then you might be facing a reconing very soon.
They're subsiding geographies that haven't yet reached critical mass for economy of scale to kick in. In mature markets they're profitable, so eventually when the other markets become mature for uber they'll also be profitable. The evidence is there. The money is put to good use. The only question mark is waymo/tesla/etc competition otherwise Uber would be a good bet.
I think another question for me is how much their "mature" markets have any real moat. Uber intentionally killed of most of their competition, hoping for monopoly rents. But rideshare strikes me as a very low barrier to entry.
Uber was certainly technologically innovative a decade ago. But a lot of the mobile and geo stuff is now off-the-shelf or as-a-service tech. Now that they're not subsidizing rides, even in this discussion we see people feeling the pinch. Uber's going to have to extract a lot of profit to reward investors and pursue growth. I think they're becoming vulnerable to low-cost competitors who just want to get by. E.g., driver co-ops and local specialty companies grabbing market niches.
Uber was certainly technologically innovative a decade ago. But a lot of the mobile and geo stuff is now off-the-shelf or as-a-service tech. Now that they're not subsidizing rides, even in this discussion we see people feeling the pinch. Uber's going to have to extract a lot of profit to reward investors and pursue growth. I think they're becoming vulnerable to low-cost competitors who just want to get by. E.g., driver co-ops and local specialty companies grabbing market niches.
So just like how Uber had to spend billions to subsidize markets to maturity, it's the same with any future competitor, low cost isn't a thing. Yet if Uber is already there the end market wouldn't look like how it currently is, it would be a mutually assured destruction with Uber where nobody wins. So spending billions to achieve nothing makes that possibility remote. Any competitor would have to bring disruptive technology.
It is not the same. I don't think there's a need to spend billions at all. The market exists. The technology exists. Drivers are already driving. I think it could be pretty easy to switch them to something that's a better deal for them.
The reason why Uber subsidies so much is because if there's not enough drivers people would need to wait a long time, or the price is very high and that creates a shitty experience that won't be able to compete. Conversely drivers don't have enough passengers. Initially, when you're just starting, that's just going to be a fact. Until you nurture the market to maturity the market doesn't exist. Don't look at what Uber has already built through years of huge spending and take it for granted.
How long does a company need to grow for? They are 11 years old and there is arguably only 1 competitor.
They operate in so many markets though, many competitors in many markets. For example in Australia Ola is generally cheaper (especially so when there is Uber surge pricing). It probably isn't sustainable for Ola either, but at the same time, can Uber afford to give up those users, even in the short term?
Amazon was essentially break even for longer than that. Worked out ok there.
Amazon was building expensive infrastructure and improving their brand, whereas people are increasingly coming to associate Uber as tarnished (don't pay their drivers enough, don't screen for rapists, dumpster fire politics, killed a pedestrian testing their self-driving cars recklessly, continue to hemorrhage money after a decade of operations).
Amazon breaking even is very different from Uber lighting cash on fire to keep the lights on. Amazon was working towards something - becoming the best online shopping place possible (and building the logistical infrastructure to make that happen, allowing them to offer better services such as guaranteed fast shipping). Uber is just continually rearranging the chairs hoping to keep it going as long as they can.
There is nothing about Uber that scales without losing more money. If there were, they would have figured out how to make money by now. It's not like they haven't had enough time and money.
Amazon breaking even is very different from Uber lighting cash on fire to keep the lights on. Amazon was working towards something - becoming the best online shopping place possible (and building the logistical infrastructure to make that happen, allowing them to offer better services such as guaranteed fast shipping). Uber is just continually rearranging the chairs hoping to keep it going as long as they can.
There is nothing about Uber that scales without losing more money. If there were, they would have figured out how to make money by now. It's not like they haven't had enough time and money.
why Is the one outlier always used as an example? But even with that outlier it’s still not a great example. Amazon Retail is a low margin, low profit business. 75% of Amazon’s profit comes from AWS.
Unless you think that Uber is somehow going to pull a high margin non related business out some type of way, it’s really a horrible comparison.
Unless you think that Uber is somehow going to pull a high margin non related business out some type of way, it’s really a horrible comparison.
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Arguably one competitor if you just consider North America and exclude taxis or anything outside of their rideshare business.
And those competitors are also subsidizing rides. In many cases they are also paying drivers better to the point you'll get uber drivers recommending other services. The winner is whoever can pump more investor money in the longest, and even the can be disrupted by new rounds of investors.
Exactly.
Maybe. Uber has more than doubled in price for me for just about any given fare over the last year. I use it much less than I used to. I'd like to see rides up as well as revenue from those rides.
Uber costs 2 to 3 times as much for me as it did 4 years ago, so yeah, I think that's changed.
But I've also been riding much less.
But I've also been riding much less.
Is it a flat rise or just new tricks like late night fees for "faster" matching ?
How is this different than surge pricing? Sounds like a marketing change and maybe a new option to not pay surge pricing in exchange for a longer wait (like traditional taxis)?
At the beginning, surge rates of 3x-10x were common at busy times. I don’t even think surge had a limit initially.
At the beginning, surge rates of 3x-10x were common at busy times. I don’t even think surge had a limit initially.
I think it’s functionally tiered surge pricing.
Essentially, you want to charge what the market will bare/bear (I literally can’t recall which :) Beer? ;) ), but what the upper end of the market will pay is higher than the middle (obviously), but you need volume to make profit so you have to target the average user. If you offer a “premium” option, then you can make more money off those users who are willing, while still claiming that it’s purely a market driven price.
I am curious whether drivers are aware of which bracket the rider is in?
Essentially, you want to charge what the market will bare/bear (I literally can’t recall which :) Beer? ;) ), but what the upper end of the market will pay is higher than the middle (obviously), but you need volume to make profit so you have to target the average user. If you offer a “premium” option, then you can make more money off those users who are willing, while still claiming that it’s purely a market driven price.
I am curious whether drivers are aware of which bracket the rider is in?
For privacy reasons, it’s unlikely drivers are aware. Uber restricts what drivers can see, especially after the trip is over when Uber removes the address they went to.
Wait, Uber is now selling cuts in line? I hope the ghosts of their kindergarten teachers haunt them as they sleep.
What do you mean “now”? That’s what surge pricing always was. The intent hasn’t changed, just the mechanisms.
Well that how I understood their "communication". They were so concerned about me waiting in a crowded area at night that they gently offered to take 3-4x times my money just to be sure a driver comes faster.
This levels of concerns warms my blood.
This levels of concerns warms my blood.
If you use Uber as an ambulance you would pay. And it would still be relatively cheap.
As bad as that sounds, there are some nights where I'd just pay that. Two years ago on July 4th I ended up stuck far from home and mass transit and had to walk a few miles and still wait 90 minutes to get an Uber.
I would have paid $200 or more for that Uber if it was fast.
I would have paid $200 or more for that Uber if it was fast.
I've seen it in base prices.
Uber has got much more expensive to me too. I remember riding in chicago was cheaper than taking the L. But I’m still using it often, I don’t have a car.
You might have been riding much less but they are booking more rides (20% more than last year). So it's not that bad.
In which regions though?
they were already profitable on rides in their most mature cities
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It's "Adjusted EBITDA" which being a non-GAAP measure in this case excludes Corporate G&A and Platform R&D. This line item was -644 million.
PE-focused guy here. I see EBITDA daily.
Adjusted EBITDA is just a funny way to say "we found a way to make us look profitable by shifting whatever we want in the cost lines". Unless you know specifically what they are doing to manipulate it, it's basically a bullshit metric to make a company look better than it really is. Often you'll see investment bankers make adj. EBITDA claims and its the buyers job to sniff out really what is going on.
Even EBITDA (which is a standard measure with standard calculations) is considered by many to be a bullshit metric:
https://www.forbes.com/sites/brentbeshore/2014/11/13/ebitda-...
Adjusted EBITDA is just a funny way to say "we found a way to make us look profitable by shifting whatever we want in the cost lines". Unless you know specifically what they are doing to manipulate it, it's basically a bullshit metric to make a company look better than it really is. Often you'll see investment bankers make adj. EBITDA claims and its the buyers job to sniff out really what is going on.
Even EBITDA (which is a standard measure with standard calculations) is considered by many to be a bullshit metric:
https://www.forbes.com/sites/brentbeshore/2014/11/13/ebitda-...
Look at WeWork's "Community-Adjusted EBITDA" for another example of the same thing. In their case, they back-loaded contracts on both sides, leasing and sub-leasing, then amoritized the sub-leasing revenue and didn't amoritize the leasing costs, showing huge positive net income at the start of the leasing terms.
Community-Adjusted EBITDA was an absolute joke when WeWork came out with it. However, I kinda get what WeWork was trying to say, it was just stupid to term it that way. Either way, any analyst worth their salt sniffs that stuff out pretty easy. It's basically a PR attempt for (future) public markets, who have less sophisticated investors.
There's a difference between GAAP EBITDA and made up EBITDA. A significantly positive GAAP/actual EBITDA means that the business is long term viable. Existing shareholders and/or creditors might get wiped out, but in the event that happens a viable business should rise from the ashes.
Source?
The OP link, of course.
Scroll to the GAAP section, earnings are under "CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS".
The GAAP loss per quarter is $1.096B, which comes out to $0.64 per share.
Scroll to the GAAP section, earnings are under "CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS".
The GAAP loss per quarter is $1.096B, which comes out to $0.64 per share.
Cash flow from operations was negative 3 billion excluding the "cash held by insurer" and capex was 0.5 billion. This puts unlevered free cash flow at closer to negative $3.5B.
The way they are breaking out segments seems to imply that theres heavy losses in non-North America so of they were to shut off the rest of world stuff maybe it looks better.
The way they are breaking out segments seems to imply that theres heavy losses in non-North America so of they were to shut off the rest of world stuff maybe it looks better.
Does this imply a ~1 year runway considering $11B cash/cash equivalents on hand?
I believe that was an annual number. Not sure runway makes sense for an entity this big. They recognized billions of stock comp. There's enough enterprise value to generate cash in a variety of ways. The company might kick and scream to not do anything dilutive but its hard to see a scenario where they couldn't access the capital markets if backed against the wall (albeit at maybe an expensive rate).
But I'm not intimately familiar with this stock.
But I'm not intimately familiar with this stock.
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I know it's SOP for Silicon Valley to see massive losses for years while a business is established, but it seems like Uber has absolutely no reason to not be profitable within a year or less. Uber is, for all intents and purposes, a platform for user acquisition and operational cost savings for a decades-old industry (taxis) that are able to be profitable on a small scale all over the world. Car services were all making money charging sustainable rates to willing customers. If the model was just to normalize pricing a bit, gain efficiency at scale and smooth the customer experience with technology, it should be an absolute gimme to be profitable. I have a hard time understanding why their business isn't 90% smoke and mirrors.
> Car services were all making money charging sustainable rates to willing customers
I think a fairly good portion of car services were making money charging monopoly rates to customers who had no choice but to take a taxi. It sustained the car services, but sucked for everyone else (as anyone who taxied in SF pre-Uber will tell you, or waited on an hour-late pre-booked taxi to arrive in NZ to go into town on Friday night, or took a chance with an "unlicensed" [some random guy] taxi in London because the black cabs were nowhere to be seen)
For example: tourists, people who can't or don't drive for some reason, people who've been out drinking, etc...
I think a fairly good portion of car services were making money charging monopoly rates to customers who had no choice but to take a taxi. It sustained the car services, but sucked for everyone else (as anyone who taxied in SF pre-Uber will tell you, or waited on an hour-late pre-booked taxi to arrive in NZ to go into town on Friday night, or took a chance with an "unlicensed" [some random guy] taxi in London because the black cabs were nowhere to be seen)
For example: tourists, people who can't or don't drive for some reason, people who've been out drinking, etc...
I don't know about monopoly rates.
I take a private car service to the airport. There are a number of different services I could choose from but the one I use is reliable and competitive with competing service when I've checked. Yes, they're quite a bit more than Uber but they're reliable, including in situations where Uber would not be (very early morning pickups well outside of a major urban area).
I take a private car service to the airport. There are a number of different services I could choose from but the one I use is reliable and competitive with competing service when I've checked. Yes, they're quite a bit more than Uber but they're reliable, including in situations where Uber would not be (very early morning pickups well outside of a major urban area).
I think you're right that Uber could easily be profitable as the jitney cab service it is. The problem is that being a modestly profitable grey-market business doesn't pay back the hundreds of millions your investors have sunk into you.
You're comparing all their lines of business but the OP talks specifically about the Rides business which they said generated a large EBIDTA profit and was more than enough to cover all G&A and R&D. It doesn't look like they break out G&A and R&D by line of business so it looks like the Rides business specifically is profitable even after paying everyone's salary at the company. Seems like the meme that they'll never be profitable has been disproven.
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Look at all the all the completely erroneous forecasts dominating the top comments in threads for previous results (often exaggerating the impending doom). This is the first thread where people seem positive about profitability, so maybe it's time to short.
Forecasting EBITDA profitability by Q4 2020
EBITDA profitability isn't profitability. It's profitability on all but accounting expenses, which are real expenses. It would be like saying, "I made 100k last year, before I paid my taxes, my mortgage, and my health insurance; but, I still made 100k!!!!!"
EBITDA is a terrible accounting metric that people use to hide REAL costs to doing business.
(Note there are reasons to use EBITDA, but in non-comparison environment [ie, an environment where you're talking about absolute metrics], it makes no sense.)
EBITDA is a terrible accounting metric that people use to hide REAL costs to doing business.
(Note there are reasons to use EBITDA, but in non-comparison environment [ie, an environment where you're talking about absolute metrics], it makes no sense.)
This is maybe a bad example because it is exactly how people talk about compensation. I’ve never heard anybody say “oh I made $70k last year after taxes and rent.”
I think nobody would say I made $70k after rent last year.
But net salary is what people often mention or look at when considering offers.
So, my net salary / take home pay is $X is what is normally talked about between people etc.
But net salary is what people often mention or look at when considering offers.
So, my net salary / take home pay is $X is what is normally talked about between people etc.
They would if people were cash-flow producing assets to be bought and sold.
> I’ve never heard anybody say “oh I made $70k last year after taxes and rent.”
Really? That's pretty much how I and everyone I know talks about compensation.
Really? That's pretty much how I and everyone I know talks about compensation.
They subtract their rent? Really? Taxes I understand. Or even 401(k), or benefits, or whatever else is between Gross and Net. But I've never heard someone deducting certain categories they spent their income on.
Maybe this is a regional thing?
Maybe this is a regional thing?
I think nappy-doo's point is what happens when taxes, mortgage, health insurance, food, shopping, etc is NOT taken into account. If you make $100k but spend $150k you're in the red, doesn't matter how effusively you celebrate making $100k.
Damn. That actually would be a better way of talking about compensation. It would seriously deflate some of the SV compensations and make other locations look more attractive.
"(Note there are reasons to use EBITDA"
What are those reasons? I've taken several accounting and "business from legal pov" classes in my life, and still I don't really understand why it's such a prominent metric. Like, either you use proper profit, or you use turnover - EBITDA has always seemed such an artificial inbetween to me.
What are those reasons? I've taken several accounting and "business from legal pov" classes in my life, and still I don't really understand why it's such a prominent metric. Like, either you use proper profit, or you use turnover - EBITDA has always seemed such an artificial inbetween to me.
EBITDA is a metric that's meaningful if you owned the whole business from the prospective of a larger company swallowing a smaller. For example, EBITDA says, "ok, if I were to price this whole business, and my cost of capital didn't change, I can use this metric to compare it to rewards of ownership of another." It allows you to "divide out" the accounting details of a business. (eg, I can borrow cheaper, or, I can use economies of scale to decrease some amortization cost, etc.)
It is largely bogus when discussing the overall metrics of a business, or using it in isolation.
It is largely bogus when discussing the overall metrics of a business, or using it in isolation.
Thank you, that clears it up for me.
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Uber/UberEats driver here with a few thousand rides. I'm retired from a technical professional career in California. I don't want to give out more info because I don't want to get deactivated. It's a fun job and I love talking to people and being out having a look around.
Uber shot itself in the foot in two ways in regard to that big percentage going towards driver incentives
A. Uber trained people not to tip so only 10% of them do.
B. Uber drivers do both ride share and Eats in the same app. They can turn off one or the other or do both. There often aren't enough Eats drivers as a result (more to follow)
A cont... ~~~~~~ People always used to tip taxi drivers, but Uber said "hey you don't need to tip on Uber" and implied or outright said tips are included. Often rides are not profitable without a tip, so drivers refuse them or cancel them. For example, driving 10 miles to give someone a 2 mile ride. So Uber has to gamify and pay incentives for consecutive rides or whatever (I ignore the games, because I do Lyft as well. I make more doing both, rather than playing the games)
Here's what Uber has said over the years about tipping:
March 30, 2014 https://web.archive.org/web/20140330002844/https://www.uber.... From the rider landing page: CASHLESS & CONVENIENT You don't need cash when you ride with Uber. Once you arrive at your destination, your fare is automatically charged to your credit card on file – no need to tip. We’ll also e-mail you a receipt.
From the help: Tipping Drivers Being Uber means there is no need to tip.
Mar 31, 2017 https://web.archive.org/web/20170331040415/http://www.uber.c... Do I need to tip? The Uber app cannot include a tip when billing you for a trip fare... In most cities, Uber is a cashless experience. Tipping is voluntary. Tips are not included in the fare, nor are they expected or required. As a rider, you are not obligated to offer your driver a gratuity in cash. If you decide you would like to tip, your driver is welcome to accept.
Today Can my driver ask for a tip? Drivers may request tips at their discretion. Drivers care about rider ratings and do their best to create an ideal trip experience. While Uber does not require riders to offer drivers a tip, you are welcome to do so in cash, through the app, on riders.uber.com, or from your emailed trip receipt. Please note that the trip fare charged to your payment account does not include a gratuity.
B cont... ~~~~~~ By doing UberEats in the same app and subjecting Eats drivers to the more stringent standards required of passenger carrying drivers (nice car, spotless background check) they eliminate a lot of Eats drivers, who may have an older car or minor traffic citation. Not only that, but why do Eats when Uber rideshare is busy? (and Lyft is busy, since most drivers do both) With Eats, you have to get out of the car, fight your way into a busy restaurant (Fri,Sat night) deal with surly restaurant personnel. Then, drive to some apartment complex, get out and look for the apartment in the maze, or drive to a house on a dark street and look for the right house number, which is barely visible in the dark or doesn't exist. Then try to find the front door (some will come out and meet you, but not many) Then on top of that not get a tip. You don't have to tip Uber, remember. Eats tip rate is a little higher.
Conclusion: Because Uber had told people that they didn't have to tip and that got into the zeitgeist, only 10% of them tip. Uber has to offer bigger driver incentives as a result. Would less people use Uber if they felt they had to tip? Yes, that's why Uber said people don't have to tip. At the time, there were less drivers and I hear anecdotally from other drivers that the money was better than now, even without the tips. Waiters, Bar tenders, many others make good tip money, but that horse has left the barn for Uber and now they can't retrain people to tip.
UberEats is a second class job for Uber/Lyft drivers. It would be better as it's own app with less stringent rules. There would be more drivers and they would get there faster.
If I am wrong about any of this, I welcome someone pointing that out. Thanks for reading.
Uber shot itself in the foot in two ways in regard to that big percentage going towards driver incentives
A. Uber trained people not to tip so only 10% of them do.
B. Uber drivers do both ride share and Eats in the same app. They can turn off one or the other or do both. There often aren't enough Eats drivers as a result (more to follow)
A cont... ~~~~~~ People always used to tip taxi drivers, but Uber said "hey you don't need to tip on Uber" and implied or outright said tips are included. Often rides are not profitable without a tip, so drivers refuse them or cancel them. For example, driving 10 miles to give someone a 2 mile ride. So Uber has to gamify and pay incentives for consecutive rides or whatever (I ignore the games, because I do Lyft as well. I make more doing both, rather than playing the games)
Here's what Uber has said over the years about tipping:
March 30, 2014 https://web.archive.org/web/20140330002844/https://www.uber.... From the rider landing page: CASHLESS & CONVENIENT You don't need cash when you ride with Uber. Once you arrive at your destination, your fare is automatically charged to your credit card on file – no need to tip. We’ll also e-mail you a receipt.
From the help: Tipping Drivers Being Uber means there is no need to tip.
Mar 31, 2017 https://web.archive.org/web/20170331040415/http://www.uber.c... Do I need to tip? The Uber app cannot include a tip when billing you for a trip fare... In most cities, Uber is a cashless experience. Tipping is voluntary. Tips are not included in the fare, nor are they expected or required. As a rider, you are not obligated to offer your driver a gratuity in cash. If you decide you would like to tip, your driver is welcome to accept.
Today Can my driver ask for a tip? Drivers may request tips at their discretion. Drivers care about rider ratings and do their best to create an ideal trip experience. While Uber does not require riders to offer drivers a tip, you are welcome to do so in cash, through the app, on riders.uber.com, or from your emailed trip receipt. Please note that the trip fare charged to your payment account does not include a gratuity.
B cont... ~~~~~~ By doing UberEats in the same app and subjecting Eats drivers to the more stringent standards required of passenger carrying drivers (nice car, spotless background check) they eliminate a lot of Eats drivers, who may have an older car or minor traffic citation. Not only that, but why do Eats when Uber rideshare is busy? (and Lyft is busy, since most drivers do both) With Eats, you have to get out of the car, fight your way into a busy restaurant (Fri,Sat night) deal with surly restaurant personnel. Then, drive to some apartment complex, get out and look for the apartment in the maze, or drive to a house on a dark street and look for the right house number, which is barely visible in the dark or doesn't exist. Then try to find the front door (some will come out and meet you, but not many) Then on top of that not get a tip. You don't have to tip Uber, remember. Eats tip rate is a little higher.
Conclusion: Because Uber had told people that they didn't have to tip and that got into the zeitgeist, only 10% of them tip. Uber has to offer bigger driver incentives as a result. Would less people use Uber if they felt they had to tip? Yes, that's why Uber said people don't have to tip. At the time, there were less drivers and I hear anecdotally from other drivers that the money was better than now, even without the tips. Waiters, Bar tenders, many others make good tip money, but that horse has left the barn for Uber and now they can't retrain people to tip.
UberEats is a second class job for Uber/Lyft drivers. It would be better as it's own app with less stringent rules. There would be more drivers and they would get there faster.
If I am wrong about any of this, I welcome someone pointing that out. Thanks for reading.
Isn't it simpler to just stop this tip culture and adjust the prices so that drivers can have an acceptable margin by default?
Simpler for who? It's price discrimination. If you're price sensitive, tip not included means you get a lower price. If you're not price sensitive (e.g. on an expense account) you can throw in a tip.
What you mean? The rest of the world runs without tips. What is discriminative is to leave the margins up to random customers picks. Instead there should be Uber prices for the driver that are fair, and no tip should be asked, so every driver knows beforehand what they are going to earn and if it is too low there will be very little incentive to apply as a driver. And Uber instead of correcting the fact people don't tip will just set a different price per km or whatever.
I wonder how Uber would do if the 2008 financial crisis were to repeat in say, 2022. Tech companies in particular are in for a surprise if a recession of that magnitude happens again.
They will (not would) die. A financial crisis means at least a temporary pullback in investments, and Uber is not cash-flow positive, so without additional funding they will shut down eventually. I see no reason to believe they ever will be cash-flow positive, unless perhaps they can get self-driving cars to work, and that seems too far off at this point.
All they need to do to be cash-flow positive is to stop trying to get self-driving cars to work and stop trying to invest in their Eats vertical. They already make good money on ride-hailing services.
And if they do so nothing would justify their current market cap. The stocks would be sent tumbling down.
Last I read, which wasn't that long ago, they were profitable in only like five cities in the world, some of which were preparing new regulation to require that they pay their drivers more.
Sounds like you did some napkin math, e.g. current war chest and burn rate over the average length of liquidity shock in a downturn?
I think a company like Uber would probably do well. The whole gig economy was born out of the 2008 financial crisis
a lot of the markets they operate in have had large recessions that they have done well in (IE Brazil). Operating theory is that on the margin, (for riders) people decide to own cars less and use alternatives more as cars are expensive and require large upfront costs but things like uber do not and (on the driver side) people have less alternatives to make money (higher paying, more stable jobs with benefits) so the uber driver gig is more appealing and driver acquisition costs are lower.
Uber would do well because there would be a flood of people with more free time and looking to make quick cash with their cars.
And folks who can’t afford cars.
I doubt that people who can't afford cars makes up a big percentage of Uber revenues. It's mostly a luxury product.
Is that good for them? Is there currently a shortage of drivers?
>Is there currently a shortage of drivers?
Most of the money Uber is burning is to recruit drivers. If there are more drivers around, there's less of a reason to burn $100MMs to recruit drivers.
Most of the money Uber is burning is to recruit drivers. If there are more drivers around, there's less of a reason to burn $100MMs to recruit drivers.
Yes, it would be, since it gives them the freedom to drop costs (supply and demand).
There doesn't need to be an existing shortage of drivers for this to be beneficial.
There doesn't need to be an existing shortage of drivers for this to be beneficial.
But they lose money on every ride, and presumably investor money would flee towards business that actually like make a profit.
They do not lose money on every ride. Read the earnings report
They would be able to pay less per ride if there are more supply - i.e. available drivers with existing assets.
This assumes demand on the rider side is unaffected by an economic downturn, which seems like a strong assumption. Lower demand on the rider side directly impacts top-line revenue, so sure, they may get to pay drivers less, but they are also getting less revenue to pay drivers from.
...and a lot fewer people taking uber rides.
Uber is diversified between Rides and Eats.
And during a recession it has been shown that people eat more fast food. So I imagine overall the business may not be so exposed.
And during a recession it has been shown that people eat more fast food. So I imagine overall the business may not be so exposed.
If I’m broke and unemployed, I have time to go get food and wouldn’t want to pay the convenience fee or delivery fee.
Wow.
I wouldn't really call that diversification. I mean, I take your point about fast food, but during a recession, it's probably about cheap eats, which Uber Eats is not. And time should be more plentiful, so there's less need for delivery. And UE is a tire fire of a business from these numbers, so that would hardly be a blessing for Uber.
I wouldn't really call that diversification. I mean, I take your point about fast food, but during a recession, it's probably about cheap eats, which Uber Eats is not. And time should be more plentiful, so there's less need for delivery. And UE is a tire fire of a business from these numbers, so that would hardly be a blessing for Uber.
You'd think that, but it's been fascinating to watch the rise of Uber Eats in Australia. Recession doesn't mean "cheap eats, save a few dollars" as much as "if we sell the car and just use Uber, we save a ton of money on insurance & licensing".
There's some data hidden away in the middle of this news story that matches what I've heard elsewhere: Uber Eats is such a huge percentage of restaurant revenue here now, stores can't afford not to be on there anymore (and being on Menulog instead isn't cutting it):
Shade Cafe took over from previous tenants, a Greek restaurant, in September last year because 60 per cent of its business was coming through UberEats, and they couldn't justify renting such a big, expensive space. “People aren’t forced to go out," Carey said. "The amount of UberEats coffees we do is amazing, it’s crazy. It’s hard to get people out of the house.
https://www.smh.com.au/business/the-economy/the-happy-shops-...
There's some data hidden away in the middle of this news story that matches what I've heard elsewhere: Uber Eats is such a huge percentage of restaurant revenue here now, stores can't afford not to be on there anymore (and being on Menulog instead isn't cutting it):
Shade Cafe took over from previous tenants, a Greek restaurant, in September last year because 60 per cent of its business was coming through UberEats, and they couldn't justify renting such a big, expensive space. “People aren’t forced to go out," Carey said. "The amount of UberEats coffees we do is amazing, it’s crazy. It’s hard to get people out of the house.
https://www.smh.com.au/business/the-economy/the-happy-shops-...
Wow! My suburb is showing (I own 3 cars :D)
I certainly would go carless if I lived in a city, but it hadn't crossed my mind that convenient food delivery could be the tipping point in car ownership vs not. But it makes sense -- as, for many, (commute) transport is solved.
I certainly would go carless if I lived in a city, but it hadn't crossed my mind that convenient food delivery could be the tipping point in car ownership vs not. But it makes sense -- as, for many, (commute) transport is solved.
Why specifically would tech companies "in particular" be in for a surprise?
The recession after the 2008 financial crisis was the worst economic downturn in nearly 80 years. We are unlikely to see an event of similar magnitude for several decades.
Still bearish on Uber stock
Same. I think about the profits up until judgement day - right now I do not see it, and anybody saying "self-driving" will make it profitable will realize, self-driving will shift the entire paradigm and that's too much uncertainty for me. I'm not comfortable saying "if X leads to Y, leads to Z"the stock wins.
* They put up $1.2B as collateral for some kind of insurance (looks like rider insurance, but it's unclear). From the footnotes: "In Q4 2019, James River Group withdrew all funds held in trust as collateral for current and future claim settlement obligations under the indemnification agreement. The $1.2 billion of operating cash outflow for 2019 represents this withdrawal of collateral from restricted cash. This change in the form of collateral had no impact on our claim settlement obligations or insurance reserves." Sounds like maybe their insurer dropped them?
* Under "Reconciliations of Non-GAAP Measures" -- the driver incentives are unreal. To deliver $734M of gross revenue on Eats in Q4, they paid out $315M in driver incentives. From the "Segment Adjusted EBITDA" at the top, Eats had EBITDA of (461). As a SWAG, for $1 in sales, they pay out about $0.42 in driver incentives and another $1.20 in all other costs (ie. the restaurant's cut for the food itself, operations support, marketing, normal driver's fees, etc).
* As a counter point to the above, to render $3B in rides revenue they paid $0.007B in driver incentives.