Uber Posts $5.2 Billion Loss and Slowest Ever Growth Rate (nytimes.com) 85
For the second quarter, Uber reported its largest-ever loss, totaling $5.2 billion, and its slowest-even revenue growth. "The double whammy immediately renewed questions about the prospects for the company, the world's biggest ride-hailing business," reports The New York Times. From the report: For the second quarter, Uber said it lost $5.2 billion, the largest loss since it began disclosing limited financial data in 2017. A majority of that -- about $3.9 billion -- was caused by stock-based compensation that Uber paid its employees after its I.P.O. Excluding that one-time expense, Uber lost $1.3 billion, or nearly twice the $878 million that it lost a year earlier. Revenue grew to $3.1 billion, up 14 percent from a year ago, the slowest quarterly growth rate the company has ever disclosed.
"We think that 2019 will be our peak investment year," Dara Khosrowshahi, Uber's chief executive, said in an interview, noting that he expected losses to decline over the next two years. "We want to make sure that the kind of growth we have is healthy growth." He added that there were other positives. Uber's bookings -- the money it gets from rides and deliveries before paying commissions to drivers -- rose 31 percent from a year ago. The company also added customers, totaling more than 100 million monthly active riders for the first time. The report notes that it wasn't all bad. The company's food delivery business, Uber Eats, "more than doubled its number of monthly customers," and Uber's price war with Lyft has subsided, "which could lead to more revenue," reports The New York Times.
"We think that 2019 will be our peak investment year," Dara Khosrowshahi, Uber's chief executive, said in an interview, noting that he expected losses to decline over the next two years. "We want to make sure that the kind of growth we have is healthy growth." He added that there were other positives. Uber's bookings -- the money it gets from rides and deliveries before paying commissions to drivers -- rose 31 percent from a year ago. The company also added customers, totaling more than 100 million monthly active riders for the first time. The report notes that it wasn't all bad. The company's food delivery business, Uber Eats, "more than doubled its number of monthly customers," and Uber's price war with Lyft has subsided, "which could lead to more revenue," reports The New York Times.
And, it's over. (Score:1)
Uber was banking on self-driving exclusivity, good luck with that.
The losses will decline for sure next year. (Score:5, Insightful)
Well of course the losses will decline this here. Uber had an almost 3 Billion dollar charge do to stock compensation related to the IPO. Sure, they will keep giving options and RSUs, but they won't ever get a 3 Billion hit again. So, the almost $1 Billion they lost through normal operations? If next quarter there is more of the same, they will trumpet how the loss was reduced by 66%.
I've notice more than once this: CEO doubletalk: When a one-time charge dings earnings, make sure to call it out as a one-time charge. But when a previous one-time charge improves growth next quarter, conveniently forget it.
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It's not just CEOs. Everything is marketing these days, and comparing to exceptional events is a favourite marketing tactic.
Re:The losses will decline for sure next year. (Score:4, Interesting)
Even if you ignore the big one-time loss, Uber's revenue per user (or what they call Monthly Active Platform Consumers) is down as well. (Uber defines a MAPC as the number of unique consumers who completed a Ridesharing or New Mobility ride or received an Uber Eats meal on our platform at least once in a given month, averaged over each month in the quarter.)
They reported 99 million MAPC compared to the 76 million during the same quarter a year ago.
Revenue was $3.166 billion compared to $2.768 billion a year ago.
That means the average revenue per MAPC declined from roughly $36.42 a year ago to $31.98 during the just reported quarter.
Uber also reported 1.677 billion trips (defined as the number of completed consumer Ridesharing or New Mobility rides and Uber Eats meal deliveries in a given period) during the period, up from the 1.242 billion a year ago
If you do the math, you'll see that trips per MAPC is going up, but the revenue Uber gets from each trip is going down.
Not a sustainable business.
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Revenue per trip declining isn't necesery a problem if costs are under control. They are still expending to low-cost markets and for example in Jordan I used to get trips across town for like $2-$3, which would get me about 500 meters down the road back home.
That said I don't know if the expansion can in fact explain the declining revenue nor do I care enough about Uber to find out, really.
How do they lose this much money? (Score:4, Interesting)
Re:How do they lose this much money? (Score:5, Interesting)
A big part of it is they subsidize each ride in the sense that they need to constantly offer incentives and bonuses to keep people driving for them, and keeping the price low to keep people using their service. So they lose money on both ends.
I can't imagine they will ever be profitable. I use Lyft a few times a month but if the price goes up 50% I'm not going to use it anymore.
Re:How do they lose this much money? (Score:5, Interesting)
Uber's assumption has been that once they've got a stranglehold on the transport market, driverless cars will be available and they can eliminate the cost of employing drivers, thereby reaching profitability.
If they waited until driverless cars were a reality, someone else could likely have beaten them to world domination, so they have to sink large amounts of capital to subsidise the business in the interim.
Even in the unlikely event that driverless cars become economically practical on US roads in the near future, they're probably not going to deal with conditions in a lot of the rest of the world for some considerable time, if ever. In short, it's a massive and likely doomed gamble that's going to burn through huge amounts of money that could otherwise have been used for something proven - like a tram network.
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In short, it's a massive and likely doomed gamble that's going to burn through huge amounts of money that could otherwise have been used for something proven - like a tram network.
or... a monorail maybe? Monorail. Monorail. Monorail.
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As soon as that's a possibility - and I assume Tesla will be the company that reaches it first - people won't need Uber at all. Tesla can create their own ride share service where the vehicle owner pockets most of the profit and Tesla takes a small percentage.
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As soon as that's a possibility - and I assume Tesla will be the company that reaches it first - people won't need Uber at all. Tesla can create their own ride share service where the vehicle owner pockets most of the profit and Tesla takes a small percentage.
Meh, as much as Tesla is bragging I think it's a long, long step between an autopilot that'll offload some of the work of driving yourself and a taxi service that can't assume the passenger will be any help. I find it highly unlikely that it'll start through crowd-sourcing consumer cars, it'll probably start through dedicated geo-fenced, remote-controllable cars like Waymo is doing. Tesla could do the same, if they leapfrog Waymo on this but either way I think one of them is sitting on the goldmine. Not end
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But they lose huge amounts quarter after quarter. The stock options are only for this quarter. They still lost over $600 million when you ignore the stock expense.
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It would be interesting to find out what Uber rides would cost, if Uber was charging the going rate for them rather than subsidizing them. I presume Uber's plan (short of switching to autonomous cars) was to start doing that, just as soon as Lyft (and whatever other competitors Uber sees as significant) went under.
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Don't know, but as someone who frequently uses Uber, I would hate to see them go away. Lyft never seems as reliable for me (pure anecdote warning).
I own a car; don't get me wrong. The wife drives it. I have an excellent road bike, I take the train in to work, and walk everywhere else. We use the car to go shopping for food and supplies on the weekend.
Where Uber comes into play is needing to cross large distances rapidly and/or under cover due to schedule changes, weather, etc.. It adds flexibility to my sch
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It's pretty simple. They charge less per ride, than it costs. Between marketing costs, driver acquisition costs, opex, and what they have to pay drivers, they lose money on every ride.
There was actually a scam in China, where drivers invited all their relatives for a "ride" which then never happens. What happened was: Driver's grandma paid $10 for a fake ride that never happened, the driver received $12 from Uber, gave $11 to grandma, leaving $1 profit for doing nothing. The best thing is you can do that from home, without even owning a car.
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I've wondered that too.
How many coders and how much money would it take to replicate their app and infrastructure? Not hundreds of programmers and billions of dollars, that's for sure.
And yet they have whole floors of offices full of people...doing what, exactly?
If I didn't know better I'd suspect money laundering.
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Give me 5 guys and a whip smart scrum-master/cat herder and a decent budget for AWS junk and I could have something up in 3 months.
I don't *think* thats where the costs are getting sunk here.
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How many coders and how much money would it take to replicate their app and infrastructure? Not hundreds of programmers and billions of dollars, that's for sure.
Hundreds of programmers to get it done quickly, maybe, because you want 100% security, and 100% reliability. But hundreds of programmers cost tens of millions of dollars, not billions.
Re: How do they lose this much money? (Score:2)
How many coders and how much money would it take to replicate their app and infrastructure? Not hundreds of programmers and billions of dollars, that's for sure.
Already done. Just about every large taxi company has one, either produced bespoke or bough/hires from a 3rd party.
Ubers on advantage is the irrational hate of the taxi industry and that is waning fast.
Re: How do they lose this much money? (Score:4, Interesting)
I believe the legal term is "dumping". Uber dumps their service on the market at less than it costs to provide said service, thereby preventing any legitimate company from competing.
Once they have achieved a near 100% monopoly over the market this will change.
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Hubert Horan explains it all for you:
https://papers.ssrn.com/sol3/p... [ssrn.com]
Most recent update: https://www.nakedcapitalism.co... [nakedcapitalism.com]
wg
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It's actually very simple.
They just had an IPO, in which they scammed investors into giving them $8 billion. They immediately gave $3.9 billion of that to their "employees". (Want to bet how much of that went to a very small number of employees aka executives?) Really, anyone could do the same, if they were equally good at scamming investors.
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I'll very much miss Uber (Score:1)
I've found Uber and Lyft very handy and will miss them when they are gone.
--- Former Driver (Score:5, Insightful)
I used to drive, while I was getting a degree and after when i was looking for a job.
At first it wasn't terrible. I started tracking all my earnings and hours in a spreadsheet.
Over an 8 month period of time i averaged $21.12/hour.
But after taking into consideration the cost - Gas, maintenance, 1099 taxes. Not including the excessive wear on the engine and the parts i hadn't yet replaced, the net was somewhere around $9/hour.
To add insult to injury , Uber dropped the per mile rate from $0.96 to $0.78 in my area.
That's when i quit.
They recently sent me a text asking me how they could help me get back on the road. I replied that if they put the per mileage rate back to $0.96 i might consider driving again. The reply was "ok thanks"
Re:--- Former Driver (Score:4, Insightful)
As a driver, the biggest problem i can see with this company is that they want their rides to be incredibly cheap. It's great for riders, for now. But it isn't sustainable. There are only so many drivers that are going to willing to try this, and then realize they are getting fucked.
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What I find the most amusing was how everyone was trumpeting that the reasons other companies and taxi's couldn't compete was because Uber had a better business model. Yet despite this better business model they aren't making a cent and the drivers are basically operating at below minimum wage. I don't see anything positive in Uber's model (except the pain it puts on taxi's, but in the end we will all pay).
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Most Uber drivers I've ever seen people use have hybrid or electric cars.
When most of your cost is fuel, you have to be stupid to drive a car that needs lots of expensive fuel.
Car expenses for employees are generally fixed in my country... everyone pays roughly the same per mile, which takes into account all the maintenance etc. and is used in court as a reasonable summary of the expense of driving your own vehicle (e.g. for expense taxation, for recompensation of costs, etc.). It isn't a lot. About the U
Must be nice (Score:2)
It must be nice to be able to lose $2.5 BILLION dollars and still stay in business.
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Uber is a piece of software ... (Score:4, Insightful)
... and a utility that runs it. The large part of value of Uber is the streets the cars and the drivers.
It would probably take Google 4 weeks or so to build Uber on the side and integrate it into Google maps.
Uber is hype, shared economy and uprooting an entrenched industry (Taxi drivers). I'm not that sure if that really is worth billions.
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Google (Score:4, Funny)
To write a back-end cloud software and a database that can scale (abt 1B entries, not more) and to provide an app in appstore - 4 weeks??
The parent said "Google".
Not only can they achieve that, but in those 4 weeks, the whole stack will be able to analyze all the drivers' and rides' tracking data and compile a list of "best place to set-up your shop in that city to maximize your customer traffic" that they will sell for good money to any prospective businesses wanting to open a shop in a given city.
Then the EU is going to try to fine them for all this personal data collection.
And a couple of months later, Google is going to lose interest, drop the platform and throw it on the big graveyard pile of other project that they've eventually abandoned.
Suddenly leaving thousands of users relying on that platform stranded.
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It would probably take Google 4 weeks or so to build Uber on the side and integrate it into Google maps.
Maybe not 4 weeks, but 6 months, but of course they can do it easily. Of course they are not doing it now, because they wouldn't want to add something that loses money to Google maps. But if Uber ever becomes profitable, you won't have to wait for long.
Good (Score:2)
The Victorian Age called; it want's its working conditions back.
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nonsense, Uber drivers chose their job and can leave anytime
Did anyone say Ponzi? (Score:2)
Pouring money in to developing markets by running the business at below cost seems, ahem, slightly bad form, old chap, ahem. Is that anti-trust or Ponzi, I never can remember.
My prediction if Uber becomes profitable (Score:2)
Uber pretending that their drivers are independent and not employees will then bite them in the arse, because every Uber driver will gladly work for AppleDrive or GoogleDrive. (Which will be exactly the same under the hood.) Half the population would trust AppleDrive a lot more tha
My Fault (Score:1)