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Comment by gok | Hacker News Reader

If they hadn't gotten into food delivery, freight, scooters, etc. they'd be profitable by now.

Only if you take their made up, non GAAP, financial measurement of “adjusted EBITDA” seriously. This is no better than WeWork’s “community adjusted EBITDA” and we see how that worked out.

Adjusted EBITDA. We define Adjusted EBITDA as net income (loss), excluding (i) income (loss) from discontinued operations, net of income taxes, (ii) net income (loss) attributable to non-controlling interests, net of tax, (iii) provision for (benefit from) income taxes, (iv) income (loss) from equity method investment, net of tax, (v) interest expense, (vi) other income (expense), net, (vii) depreciation and amortization, (viii) stock-based compensation expense, (ix) certain legal, tax, and regulatory reserve changes and settlements, (x) asset impairment/loss on sale of assets, (xi) acquisition and financing related expenses, (xii) restructuring charges and (xiii) other items not indicative of our ongoing operating performance.

Well ok first, there's a world of difference between the reasonably widespread practice of adjusted EBITDA and inventing your definition that does not account for the costs of marketing or leases.

But I'm really not even commenting on these results precisely. They would have been in an entirely different position without all the distractions. Uber's ride business now makes a billion dollars a month in revenue. That's after paying drivers. If they had been laser-focused on making the ride business work, they could have grown a much lower-overhead business. They could have taken the company public years ago. An earlier IPO would have meant those huge stock-based compensation packages would be off the books by now. A just-get-me-a-car Uber would have been GAAP profitable by now.

There is a reason we have a GAAP as a way of not letting companies just make up metrics. Any company can show a “profit” as long as you don’t count expenses that make you unprofitable. They leave out over a dozen expenses to claim some made up definition of “profitability”. From their numbers, how do you get that just the ride hailing business would make more money than it cost to run?

Adjusted EBITDA is just a made up term. It is isn’t GAAP so by definition it isn’t Generally Accepted. Made up metrics are generally used by startups and non profitable public companies to justify their valuations to investors.

This is a fundamentally "what-if" scenario so it's not going to be perfect math, but we can look for hints. To go from non-GAAP to GAAP, you can add the adjustments up. The biggest non-GAAP adjustment (around 2/3rds of total) is stock-based compensation. That $401 million in stock-based compensation really can't be repeated, and wouldn't have been so large if they had IPO'd sooner. The next big they spent another ~$250million on driver incentives, almost entirely on UberEats.

How much of their expenses are required for a theoretical rides-only Uber? Impossible to say; they don't break out spending by segment. But we can make some guesses. The rides product has now existed for many, many years. Did they really need to become a ~22,000 employee company if all they were going to do is rides? I would guess no. So the question here is really: how much of their current expenses do we think only exist due non-rideshare business? The autonomy program is evidently an expensive bust. I see a lot of scooter marketing, which we can tell from this report isn't selling. Food is growing but they're in 3rd place, and it seems like they spend a lot of money to even get to third. So really the question is: are >30% of their expenses due to the non-ride business? I would guess yes.

Really interesting. Yeah wonder how many fewer employees would be needed. Interesting thought exercise overall.

EBITDA is a wipespread (though still somewhat sketchy) practice. "Adjusted EBITDA" is just making up fairy-tale numbers.

I didn’t realize the EBiTDA wasn’t GAAP. But you are absolutely right.

https://www.investopedia.com/terms/e/ebitda.asp

There are legitimate reasons to report non-GAAP numbers next to the required GAAP numbers. When it was required to recognize revenue phone sales over 2 years, Apple included non-GAAP numbers to give investors a better sense of how sales were actually growing, and reported it as "Adjusted Sales" and "Adjusted Net Income." These were completely made up terms, but they did give a vastly more accurate image of where the company was going than the GAAP numbers did.

Which adjustments in particular do you find deceptive in Uber's case?

They aren’t “deceptive”, they spell out how they arrived at those numbers, they disclosed that they aren’t GAAP and did all of the other disclosures that anyone who knows how to read financial statements would understand and should be able to make a judgement call on how to weight them.

I’m more calling out the tech industry in general and some posters on HN specifically about how they sugar coat the performance of money losing present and former unicorns and they don’t measure success by profitability or at least marginal profits where you could see a clear road to profitability.

Dropbox for instance is a YC/HN darling. It is one of only two YC funded companies to ever go public, has never been profitable and looks like it’s going to be squished as other players like Microsoft, Google and even Apple make their entire business “just a feature”.

I agree that the industry would be healthier if companies tried to become viable/profitable earlier. I think in particular many took the wrong lesson from Amazon's ability to grow without making money for ~20 years.

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