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According to their last earnings call, Uber's rides business was making enough profit paying for all of R&D costs. It's been a long time since the "losing money

According to their last earnings call, Uber's rides business was making enough profit paying for all of R&D costs. It's been a long time since the "losing money on every ride" narrative was true.

arcticbull 6y ago
Weren't the massive quantity of discounts required to entice people to use them factored into marketing? Further I believe they counted the entire price of a shared ride as "revenue" while they only counted 30% of regular rides, even though shared rides likely made them even less money? That would restore the narrative.
- georgespencer 6y ago
  Their annual report[1] shows 2019 revenue of $14.1bn, with cost of revenue of $7.2bn and sales and marketing costs of $4.6bn. Both cost of revenue and sales and marketing (for simplicity's sake I'll call these "direct costs") grew proportionately to revenue growth year on year from 2018 to 2019, running at 77% of revenue in 2018 and 83% of revenue in 2019. The 5% swing there is almost purely marketing: cost of revenue was 49.8% of revenue in 2018 and 50.9% in 2019, whereas marketing grew from 27.9% to 32.6%. So they could be hiding subsidies (prefer this term to discounts) in marketing costs, although it's not such a significant figure that it loses them money. It's conceivable that they're still doing some hocus pocus with the treatment of pool revenue, but it would have to be a significant portion of their revenue for it to have an impact. I can't find the disclosures on this if they're in there (although they do disclose that they treat three people pooling as three rides, which seems fair enough). The business suffered a 2.8x increase in losses from operations -- $8.5bn up from $3bn -- but this appears to mainly be attributable to R&D costs growing from $1.5bn to $4.8bn YOY. [1] https://investor.uber.com/news-events/news/press-release-details/2020/Uber-Announces-Results-for-Fourth-Quarter-and-Full-Year-2019/ https://investor.uber.com/news-events/news/press-release-det...

According to their last earnings call, Uber's rides business was making enough profit paying for all of R&D costs. It's been a long time since the "losing money on every ride" narrative was true.

arcticbull 6y ago

Weren't the massive quantity of discounts required to entice people to use them factored into marketing? Further I believe they counted the entire price of a shared ride as "revenue" while they only counted 30% of regular rides, even though shared rides likely made them even less money? That would restore the narrative.

georgespencer 6y ago
Their annual report[1] shows 2019 revenue of $14.1bn, with cost of revenue of $7.2bn and sales and marketing costs of $4.6bn. Both cost of revenue and sales and marketing (for simplicity's sake I'll call these "direct costs") grew proportionately to revenue growth year on year from 2018 to 2019, running at 77% of revenue in 2018 and 83% of revenue in 2019. The 5% swing there is almost purely marketing: cost of revenue was 49.8% of revenue in 2018 and 50.9% in 2019, whereas marketing grew from 27.9% to 32.6%. So they could be hiding subsidies (prefer this term to discounts) in marketing costs, although it's not such a significant figure that it loses them money. It's conceivable that they're still doing some hocus pocus with the treatment of pool revenue, but it would have to be a significant portion of their revenue for it to have an impact. I can't find the disclosures on this if they're in there (although they do disclose that they treat three people pooling as three rides, which seems fair enough). The business suffered a 2.8x increase in losses from operations -- $8.5bn up from $3bn -- but this appears to mainly be attributable to R&D costs growing from $1.5bn to $4.8bn YOY. [1] https://investor.uber.com/news-events/news/press-release-details/2020/Uber-Announces-Results-for-Fourth-Quarter-and-Full-Year-2019/ https://investor.uber.com/news-events/news/press-release-det...