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Uber loses money, but it doesn't sell rides at a loss. Up to 2015 at least (the date of the best finance leak I've seen), Uber's cut of fares was ~18%; and furt

Uber loses money, but it doesn't sell rides at a loss. Up to 2015 at least (the date of the best finance leak I've seen), Uber's cut of fares was ~18%; and furthermore, that 18% cut more than covered Uber's costs of sales. Source: http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver-part-one-understanding-ubers-bleak-operating-economics.html http://www.nakedcapitalism.com/2016/11/can-uber-ever-deliver... Uber actually makes money on each ride - it's just that the gross profit from those rides is short of covering its operating expenses. 12,000 employees are not inexpensive. Based on these financials, if Uber halted most software development and halted subsidies into underdeveloped markets, it seems quite plausible the company would become profitable. Investors might not recoup their whole investments, but the company in zombie could earn back some profits.

mikeash 9y ago
Where is all their money going, then? Seems like a business that should have relatively low overhead.
- tedsanders 9y ago
  They have 12,000 employees, apparently. Diversity numbers they released earlier this year bucketed those employees into tech, non-tech, and customer support. Their fixed costs probably include R&D (tech) and SG&A (non-tech). Customer support depends on how they do their accounting.
stoolpigeon 9y ago
Maybe I don't understand the charts and the article you linked to but it says that: "Uber passengers were paying only 41% of the actual cost of their trips; Uber was using these massive subsidies to undercut the fares and provide more capacity than the competitors who had to cover 100% of their costs out of passenger fares." To me that sounds like selling rides at a loss.
- tedsanders 9y ago
  On an average cost basis that includes fixed costs, yes, Uber was losing money on each ride. But on a variable cost basis, Uber was making money. Each additional ride served was bringing them closer, not further, from profitability. Gross margins were positive even if overall margins were negative.

mikeash 9y ago

Where is all their money going, then? Seems like a business that should have relatively low overhead.

tedsanders 9y ago
They have 12,000 employees, apparently. Diversity numbers they released earlier this year bucketed those employees into tech, non-tech, and customer support. Their fixed costs probably include R&D (tech) and SG&A (non-tech). Customer support depends on how they do their accounting.

stoolpigeon 9y ago

Maybe I don't understand the charts and the article you linked to but it says that: "Uber passengers were paying only 41% of the actual cost of their trips; Uber was using these massive subsidies to undercut the fares and provide more capacity than the competitors who had to cover 100% of their costs out of passenger fares." To me that sounds like selling rides at a loss.

tedsanders 9y ago
On an average cost basis that includes fixed costs, yes, Uber was losing money on each ride. But on a variable cost basis, Uber was making money. Each additional ride served was bringing them closer, not further, from profitability. Gross margins were positive even if overall margins were negative.