Uber’s Financials: An Inside Look
wsj.com
wsj.com
In reality Uber is just like Visa. They are a transaction processor.
Visa does not report revenue of trillions of dollars per year.
For Uber actual revenue is somewhere between "Gross Profit" (865M) and "Net Revenue" (2B) and then their actual operating expenses are between 2B and 3.2B depending on what you call revenue and cost of revenue.
The bottom line is that they are taking huge losses for relatively small amounts of revenue.
Reporting your transaction volume as revenue is really infantile and should get you laughed out of the room, but here we are.
Also they want to claim their drivers are not employees but then want to count the full fare as “revenue.” Sigh.
Those example are gimmicks set by C management that, while legal, certainly raised a few eyebrows in the accounting dept. Also, having accounting training helps detection BS practices.
Where does this go wrong? SME where the accountant has to expect less questions, since there are no professionals watching the stock. That's why banks do their own due diligence (and p2p lending is more risky). Investing in individual stocks based on your reading of an annual report. No way you are more savvy than the leeways an accountant has.
If you see them as a cab company, then their reporting makes sense.
That is what they legally are. If they aren't that then they don't have any business at all.
What's the endgame for Uber? Surely that's operating an autonomous fleet. No drivers. Visa will always have merchants, but Uber will not always have drivers.
All those cost points don't benefit the endgame.
There is no reason why municipalities should not consider their own autonomous fleets as part of public transit. The roads are already public, having a fully autonomous fleet is hardly any different than public buses or trains purchased from private manufacturers. It'll be a commodity (or at least it should be, short of monopolization and cronyism).
Except that they're terrible inefficient, and still 10~15 years away. Even if the tech was available tomorrow, and even if you could cut off Interstates so they only allowed autonomous vehicles and all those vehicles could run at 120kph, bumper-to-bumper at less than .5 meter intervals, a six lane highway would even begin to approach the capacity of a single track of London train line running at <2min intervals (which they often do during the morning rush .. often times < 30sec intervals).
http://penguindreams.org/blog/self-driving-cars-will-not-sol...
Self-driving cars are new and shiny and all the rage, but they're nowhere near ready for production deployment en-mass, people still don't realize that no person can actually own a autonomous car (the inspection/maintenance cycle would need to be more strict than a small engine aircraft) and therefore they wouldn't be able to be modified in any way.
For a fraction of the cost, American cities could revitalize and expand our crumbling rail infrastructure, which would be way more helpful than autonomous public car fleets.
The point is car ownership itself is obsolete and it's not a big stretch for there to be a public car option. The road infra is already public, just like rail tracks and rail cars.
As far as autonomous vs traditional public transit, it's a false dichotomy. Municipalities will use both when it comes to moving people around, because they're good for different use cases. You choose one particular metric where trains do win out, but that's an irrelevancy, because it's not even close to feasible to build a system of trains that do everything that cars currently are able to do.
Right now, Uber's core competencies are having a nice app, and managing a bunch of people-centric things like recruiting drivers and getting them to be available to drive at times when people want rides. Of those two, the latter is probably the more difficult one to clone. It's also useless to a company that doesn't employ any drivers.
What they have close to zero competency in is fleet management. That's something for which traditional cab companies have something approaching a 100 year head start, and they which are very good at.
I think that's the reason why Uber has decided that it's so critical that they develop their own self-driving car technology: They need to control a supply of self-driving cars during the critical transition period if they want to avoid being at a disadvantage while it's happening. If everyone's buying commodity self-driving cars from a big automaker, then it's just a game of who can operate most efficiently in order to offer the lowest prices. Traditional cab companies were already good at that, and, if anything, the influence of Uber on their market over the past however many years has forced them to get even better at it.
If Uber’s big moat is on the driver supply side, an autonomous fleet could wipe that away and hand the profits to Google & Apple in an auction based market for rides.
A matter of opinion I guess. I would characterize it as being as misleading as possible without actually being false.
The point is that Bookings are not income at all so they don't belong anywhere on an income statement.
"Contra Revenue" and "Net Revenue" are pure fiction because the Bookings are not revenue in the first place.
Once again, if you want to see how a real company run by adults does this, just look at Visa's annual report:
http://s1.q4cdn.com/050606653/files/doc_financials/annual/20...
Spoiler Alert: transaction volume is on Page 38.
The fact that the funds go through Uber's account has nothing to do with it.
See Uber's terms of service:
"with respect to Third Party Providers, Charges you incur will be owed directly to Third Party Providers, and Uber will collect payment of those charges from you, on the Third Party Provider’s behalf as their limited payment collection agent"
https://www.uber.com/legal/terms/us/
Bookings are not revenue, which is why Uber can't call them revenue, but then wtf is "Contra Revenue" and how does Bookings - Contra Revenue = Net Revenue?
Basic math: 5 Apples - 2 Oranges != 3 Oranges
Provide a link to the annual report for a single public company that does this and I will accept your claim.
Edit:
See the annual report for Priceline which owns Booking.com, Kayak, etc.
http://files.shareholder.com/downloads/PCLN/5793618865x0xS10...
P.33 They report real revenue of 10.7B with no mention bookings
P.41 They report gross bookings of 68B for the same period
As a better comparison, here is the data Expedia puts out on an earnings release: https://files.shareholder.com/downloads/EXPE/5068357871x0x92...
No. Sorry. They are also processing the transaction and keeping the whole amount of transaction which is not what Visa does.
Net Revenue was $2.0B which is after paying drivers.
http://s1.q4cdn.com/788591527/files/doc_financials/2016/annu...
If you look at the Live Nation annual report you will see Ticketmaster reporting revenue of 1.8B (P.34) on 186M fee-bearing tickets sold (P.29).
They don't specifically say what the face value of those tickets was but they are almost certainly only reporting their fees as revenue because the average is less than $10 per ticket and their revenue includes other things besides ticket fees.
It’s not GAAP so as long as you’re private it’s merely stupid — if they tried that when public the SEC would be involved. Of course they couldn’t go public that way in the first place.
http://fortune.com/2017/11/29/uber-financials-loss-softbank/
The point is while losses were $1.4 billion, the free cash flow was actually negative $585 million. At this rate, excluding the Softbank investment, it will take Uber more than 4 years before they run out of money.
* Close to $10B in gross bookings, which in a back of the envelope guess means 5-10 million rides per day (assuming $10-$20 per ride) If anything maybe more as 'pool' options get more popular.
* Slower growth for Uber means they are still increasing topline bookings by 10+% per quarter
* Uber's reported R&D spending is around 15% of revenue. The proportion is comparable to companies like google & microsoft, but uber is still 10x smaller overall
Net revenue: $2.013 billion versus $1.658 billion last quarter (up 21%).
Net income: -$1.462 billion versus -$1.064 billion last quarter.
Total assets (including cash, cash equivalents, investments, and more): $15.64 billion versus $15.708 billion a year ago.