5 ms·

What's their cash on hand position, I believe I saw that there's 13B, after adding 8B in the IPO, that seems like a ton of cash on hand for a business that isn'

by xfour 7y ago

What's their cash on hand position, I believe I saw that there's 13B, after adding 8B in the IPO, that seems like a ton of cash on hand for a business that isn't showing any signs of turning of profit. Could they not just without any further cash infusion continue to lose similar amounts for the next three years and be cash solvent. Does that then not give a big incentive to figure out how to become profitable in the near term?

deleted 7y ago
[deleted]
pbreit 7y ago
The core business is very profitable. Loss-making is happening in their less mature product categories and expansion efforts.
- mbesto 7y ago
  Source?
  - pbreit 7y ago
    https://investor.uber.com/news-events/news/press-release-details/2019/Uber-Announces-Results-for-Third-Quarter-2019/default.aspx https://investor.uber.com/news-events/news/press-release-det...
- kposehn 7y ago
  You’re correct. Not sure why you were being downvoted.
  - mdorazio 7y ago
    Because (s)he is not correct. "Adjusted EBITDA" =/= EBITDA. Uber rides are only profitable if you use their bullshit non-GAAP numbers. If you do the accounting in the proper way they are not profitable.
    - pbreit 7y ago
      Uber's mature Rides businessee are very profitable. Sorry.
  - Andrex 7y ago
    Sources are useful. Edit- Ah yeah, "adjusted" stats are BS.
    - pbreit 7y ago
      https://investor.uber.com/news-events/news/press-release-details/2019/Uber-Announces-Results-for-Third-Quarter-2019/default.aspx https://investor.uber.com/news-events/news/press-release-det...
- deweller 7y ago
  I was under the impression that they were still subsidizing rides. Are they actually making a profit?
  - LandR 7y ago
    No.
  - pbreit 7y ago
    Your impression is wrong. The core rides business is very profitable.
- askl56 7y ago
  It's profitable through Uber's own non GAAP numbers, the GAAP numbers are still unprofitable.
- JackFr 7y ago
  And one of the benefits of an IPO is that the market discipline management to focus on being profitable (assuming they're not playing games with from multi-class voting shenanigans.) It's funny that this role of the market is often derided ("Management isn't thinking long term -- they'll do anything to make next quarters numbers...") but it's very important.
- chollida1 7y ago
  > The core business is very profitable. Loss-making is happening in their less mature product categories and expansion efforts. Not really. It is true that in their non GAAP accounting they broker out revenue by segment and showed that "Rides" made a profit of $631M but they also include categories for eats, freight and other bets that lost money. But the kicker is that they introduced a category called "Corporate G&A and Platform R&D" which lost $621. If you look at this category which includes > "Corporate G&A also includes certain shared costs such as finance, accounting, tax, human resources, information technology and legal costs. Platform R&D also includes mapping and payment technologies and support and development of the internal technology infrastructure. Our allocation methodology is periodically evaluated and may change." SO basically they are saying Rids is profitable if you don't need to have a business to run it, ie no lawyers, HR, execs, payment systems, cloud infrastructure or employees to develop code. TL/DR rids is profitable if you ignore the cost of running the Rides business and only look at the income that it brings in, which is true for any business that has income.
  - AlexandrB 7y ago
    So positive gross margin vs. negative net margin.
  - mikraig 7y ago
    ...what's $631M - $621M? I agree that they're losing money overall. But just the ridesharing part is making enough profit to cover the entire Corporate G&A line item.
- elliekelly 7y ago
  Take a look at their most recent 10-Q[1] where you'll notice their claim of profitability relies on the completely made up (and non-GAAP) metric of "Rides Adjusted EBITDA". From page 36 of the filing ("Segment adjusted EBITDA" collectively references their adjusted EBITDA metrics for rides, eats, and freight): > Segment adjusted EBITDA is defined as revenue less the following expenses: cost of revenue, operations and support, sales and marketing, and general and administrative and research and development expenses associated with the Company’s segments. Segment adjusted EBITDA also excludes any non-cash items or items that management does not believe are reflective of the Company’s ongoing core operations (as shown in the table below). The referenced table includes $1.8 billion in Corporate Governance. That one line item completely wipes out their "Rides Adjusted EBITDA" profitability. They're only profitable as long as they don't have any expenses. And that isn't really how "profit" works. [1] http://www.sec.gov/Archives/edgar/data/1543151/000154315119000017/fy2019q3financialstate.htm http://www.sec.gov/Archives/edgar/data/1543151/0001543151190...
  - sharkmerry 7y ago
    I believe groupon did similar accounting tricks of not using GAAP metrics and everybody ate it up too

by xfour 7y ago

deleted 7y ago

[deleted]

pbreit 7y ago

The core business is very profitable. Loss-making is happening in their less mature product categories and expansion efforts.

mbesto 7y ago
Source?
- pbreit 7y ago
  https://investor.uber.com/news-events/news/press-release-details/2019/Uber-Announces-Results-for-Third-Quarter-2019/default.aspx https://investor.uber.com/news-events/news/press-release-det...
kposehn 7y ago
You’re correct. Not sure why you were being downvoted.
- mdorazio 7y ago
  Because (s)he is not correct. "Adjusted EBITDA" =/= EBITDA. Uber rides are only profitable if you use their bullshit non-GAAP numbers. If you do the accounting in the proper way they are not profitable.
  - pbreit 7y ago
    Uber's mature Rides businessee are very profitable. Sorry.
- Andrex 7y ago
  Sources are useful. Edit- Ah yeah, "adjusted" stats are BS.
  - pbreit 7y ago
    https://investor.uber.com/news-events/news/press-release-details/2019/Uber-Announces-Results-for-Third-Quarter-2019/default.aspx https://investor.uber.com/news-events/news/press-release-det...
deweller 7y ago
I was under the impression that they were still subsidizing rides. Are they actually making a profit?
- LandR 7y ago
  No.
- pbreit 7y ago
  Your impression is wrong. The core rides business is very profitable.
askl56 7y ago
It's profitable through Uber's own non GAAP numbers, the GAAP numbers are still unprofitable.
JackFr 7y ago
And one of the benefits of an IPO is that the market discipline management to focus on being profitable (assuming they're not playing games with from multi-class voting shenanigans.) It's funny that this role of the market is often derided ("Management isn't thinking long term -- they'll do anything to make next quarters numbers...") but it's very important.
chollida1 7y ago
> The core business is very profitable. Loss-making is happening in their less mature product categories and expansion efforts. Not really. It is true that in their non GAAP accounting they broker out revenue by segment and showed that "Rides" made a profit of $631M but they also include categories for eats, freight and other bets that lost money. But the kicker is that they introduced a category called "Corporate G&A and Platform R&D" which lost $621. If you look at this category which includes > "Corporate G&A also includes certain shared costs such as finance, accounting, tax, human resources, information technology and legal costs. Platform R&D also includes mapping and payment technologies and support and development of the internal technology infrastructure. Our allocation methodology is periodically evaluated and may change." SO basically they are saying Rids is profitable if you don't need to have a business to run it, ie no lawyers, HR, execs, payment systems, cloud infrastructure or employees to develop code. TL/DR rids is profitable if you ignore the cost of running the Rides business and only look at the income that it brings in, which is true for any business that has income.
- AlexandrB 7y ago
  So positive gross margin vs. negative net margin.
- mikraig 7y ago
  ...what's $631M - $621M? I agree that they're losing money overall. But just the ridesharing part is making enough profit to cover the entire Corporate G&A line item.
elliekelly 7y ago
Take a look at their most recent 10-Q[1] where you'll notice their claim of profitability relies on the completely made up (and non-GAAP) metric of "Rides Adjusted EBITDA". From page 36 of the filing ("Segment adjusted EBITDA" collectively references their adjusted EBITDA metrics for rides, eats, and freight): > Segment adjusted EBITDA is defined as revenue less the following expenses: cost of revenue, operations and support, sales and marketing, and general and administrative and research and development expenses associated with the Company’s segments. Segment adjusted EBITDA also excludes any non-cash items or items that management does not believe are reflective of the Company’s ongoing core operations (as shown in the table below). The referenced table includes $1.8 billion in Corporate Governance. That one line item completely wipes out their "Rides Adjusted EBITDA" profitability. They're only profitable as long as they don't have any expenses. And that isn't really how "profit" works. [1] http://www.sec.gov/Archives/edgar/data/1543151/000154315119000017/fy2019q3financialstate.htm http://www.sec.gov/Archives/edgar/data/1543151/0001543151190...
- sharkmerry 7y ago
  I believe groupon did similar accounting tricks of not using GAAP metrics and everybody ate it up too