# Uber, Lifting Financial Veil, Says Sales Growth Outpaces Losses



## Maven (Feb 9, 2017)

The ride-hailing giant opens up about its financials for the first time in an interview with Bloomberg.
April 14, 2017, 1:30 PM EDT April 14, 2017, 3:03 PM EDT by Eric Newcomer

Uber Technologies Inc. isn't required to report its finances publicly, but the privately held company has decided to forgo that luxury for the first time. *Uber said its revenue growth is outpacing losses, hoping to show the business is on a strong trajectory as it attempts to address a recent cascade of scandals.*

The ride-hailing giant more than *doubled gross bookings in 2016 to $20 billion*, according to financial information Uber shared with Bloomberg. *Net revenue was $6.5 billion, while adjusted net losses were $2.8 billion*, excluding the China business, which it sold last summer.

Uber declined to report first-quarter numbers, saying they were in line with expectations but that the company hasn't yet presented them to investors. The company said it's pleased to see revenue growth far exceeding losses last year and that its business is still performing well this year even as it faces unyielding controversy. "*We're fortunate to have a healthy and growing business, giving us the room to make the changes we know are needed on management and accountability, our culture and organization, and our relationship with drivers,*" Rachel Holt, who runs Uber's U.S. ride-hailing business, wrote in an emailed statement.

In recent months, Uber has seen an exodus of top executives as it investigates claims of sexual harassment and a toxic work culture. Uber is facing a lawsuit over self-driving car technology from Alphabet Inc.'s Waymo, backtracked on a program called Greyball that was used to deceive government officials and apologized after its chief executive officer was videotaped arguing with a driver. Travis Kalanick, the CEO, said he's seeking a chief operating officer to help right the ship.









Uber's business is massive and getting bigger. In the last three months of 2016, gross bookings increased 28 percent from the previous quarter to $6.9 billion. The company generated $2.9 billion in revenue, a 74 percent increase from the third quarter. Losses rose 6.1 percent over the same period to $991 million.

While the rate of sales growth compared with losses is encouraging, Uber is still losing a significant sum, said Evan Rawley, a business professor at Columbia University. "That's a lot of cash to burn in a quarter," he said. Jeff Jones, the company's president of ridesharing who resigned last month, previously joked to staff that he joined Uber expecting P&L, meaning a profit and loss statement, but only found an L.

Uber said it uses generally accepted accounting principles. Revenue includes only the portion Uber takes from fares, except in the case of its carpooling service; the company counts the entire amount of an UberPool fare as revenue. The more Uber's business shifts to the multi-passenger service, the faster revenue grows. Non-GAAP revenue is significantly smaller. The loss statement doesn't account for employee stock compensation, certain real-estate investments, automobile purchases and other expenses.









Valued at $69 billion by investors, Uber operates in about 75 countries. The company was spending aggressively to compete in China, with about $1 billion in losses there last year, bringing its losses to $3.8 billion globally. It sold the China business in August. As part of the deal, it received an 18 percent stake in local ride-hailing company Didi Chuxing and recognized the value of those shares in its financial statement. Uber said global net losses were $1.2 billion after accounting for the sale, taxes and other factors.

Since it was founded in 2009, Uber has burned through at least $8 billion in its lifetime. The company said it has $7 billion of cash on hand, along with an untapped $2.3 billion credit facility.

*Lyft *Inc., which is Uber's main competitor in the U.S., is also closely held and doesn't disclose financial performance. It's difficult to compare Uber's business with any public company. Uber partly models itself after Amazon.com Inc., but even at the peak of the dot-com boom, Amazon lost less than $2 billion, adjusted for inflation. Amazon has never lost more than that in a year. Chipmakers Qualcomm Inc. and Micron Technology Inc., which require large capital investments, never lost that much.

"Uber is a one-of-a-kind company, in good ways and bad ways. It's going to be a case study," said Aswath Damodaran, a finance professor at New York University. "This is a cash-burning machine."

(Updates with year company was founded in the ninth paragraph. A previous version corrected the percent increase of losses.)
______________________________________________________________

*Uber losses would have ranked near top among public companies in 2016*
MarketWatch Published: Apr 14, 2017 5:18 p.m. ET

 If Uber Technologies Inc. had been a public company in 2016, it would have been among the top 10 biggest money losers. Uber reveals adjusted net loss of $2.8 billion to Bloomberg, but GAAP loss appears to top $3.8 billion.Uber reported higher revenue than adjusted net losses in 2016.

The ride-hailing company disclosed 2016 adjusted net losses of $2.8 billion on net revenue of $6.5 billion to Bloomberg, in a story published Friday. The net-loss figure doesn't include its China business, which it sold to Didi Chuxing in August 2016, nor does it include stock-based compensation granted to staffers and automobile purchases, Bloomberg reported.

Uber lost about $1 billion in China, according to Bloomberg and other sources, which adds up to an approximate net loss of $3.8 billion in 2016. That tally would be even larger if other costs which would be counted under generally accepted accounting principles, or GAAP, had been factored.

All totaled, Uber's loss would easily place it among the top 10 largest GAAP net losses by public companies in the fiscal year most closely mirroring the 2016 calendar year, according to Securities and Exchange Commission data crunched by Audit Analytics, a financial reporting research company









The net loss Uber pointed to, $2.8 billion excluding its China losses and other factors, is larger than the non-GAAP net loss for all but one company in the S&P 500 index SPX, -0.68% : ConocoPhilips COP, -1.66% which reported a non-GAAP loss of $3.3 billion for the year, Audit Analytics reported. Some companies that would likely rank higher than Uber on a GAAP-accounting basis would fall lower on a non-GAAP list. For instance, Hess Corp. HES, -2.23% reported a GAAP loss of $6.1 billion but a non-GAAP loss of slightly less than $1.5 billion.

Uber lost $1.2 billion when stripping out taxes, adding in the Didi shares it received in exchange for its money-losing China business, and accounting for other unnamed factors, according to the company's Bloomberg interview.

Uber didn't respond to a request for comment from MarketWatch.

The financials Uber revealed also showed gross bookings-the total amount collected for rides-of $20 billion in 2016, an increase of 126% from the previous year. On a quarterly basis, they revealed a gross-booking increase of 28% from the third quarter to the fourth quarter, when Uber said it had bookings of $6.9 billion. The company reported a net loss of $991 million for the fourth quarter, Bloomberg said, which presumably doesn't count stock-based compensation nor other potential charges.

Uber didn't share any financial results from the first quarter of this year with Bloomberg. Since the calendar has changed to 2017, Uber has faced criticism for its workplace culture and comments made by Chief Executive Travis Kalanick, as well as a lawsuit from Waymo, the self-driving car unit of Alphabet Inc. GOOG, -0.09% GOOGL, -0.15% over alleged theft of intellectual property. The company was even hit with a loud #DeleteUber protest that gave rival Lyft Inc. at least a temporary bump.

Uber received a valuation of $68 billion in a June 2016 funding round, and boasts the highest valuation of any company in The Wall Street Journal's billion-dollar club. Its rival, Lyft, just increased its valuation, thanks to a recent $500 million funding round, but still lags behind Uber at $7.5 billion.

According to a Bloomberg article earlier in the year, Uber losses increased from the first quarter to the second quarter of 2016, with net losses of $750 million in the second quarter on an Ebitda basis. That's up from $520 million in the first quarter. In 2015, Uber lost "at least" $2 billion, Bloomberg reported. Earnings before interest, tax, depreciation and amortization-basis, or Ebitda, is often used as a measure of cash flow or operating performance.


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## TwoFiddyMile (Mar 13, 2015)

"Uber counts the entire amount of an Uber pool fare as revenue".

Hence the conspiracy to convert everything to Pool.


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## Brooklyn (Jul 29, 2014)

So what they're saying is

Hey look I know we've been getting a lot of bad press and people are starting to question our losses but look we make a lot of money.. we won't show officially how much or show our losses but we make money and it's catching up to our losses but we won't tell you what it is.


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## FL_Dex (Nov 13, 2016)

It takes some real balls (or permanent psychosis) to trumpet $2.8 billion in losses as good news. $991 million of that in Q4 2016. That is a shlt load of cash to burn in three months. So, the high five they're taking is because gross bookings grew faster than their record losses. That finance professor has it right; Uber is a cash burning machine.

If you were an investment advisor and said something like that to one of your clients, they would club you to death with a 9 iron like a baby seal.


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## TwoFiddyMile (Mar 13, 2015)

I can't emphasize enough that they are USING all of you to do pool so their fake numbers look better.
Holy frak.


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## ginseng41 (Nov 30, 2014)

With their available cash and credit plus these lawsuits. They're done in 2 years


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## FL_Dex (Nov 13, 2016)

TwoFiddyMile said:


> USING all of you to do pool so their fake numbers look better.


Oh, you might be right about that. I know for a fact a lot of pax are picking Pool because it's the default in many areas. But, you're right that the number of ignored/canceled requests makes me wonder how they're booking those increases? Now you got my bullslt meter twitching. Something is not right with these numbers.


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## Jermin8r89 (Mar 10, 2016)

For uber they cant lose anything now. Its all on us. If they had SDVs they deffinently would be in the negitive. I juat dont see them doing good once they have SDVs


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## Gung-Ho (Jun 2, 2015)

I'm not good at charts but I think it infers that despite the Gross revenues and bookings going UP. The loses are remaining the same.

So no matter how much their business increases loses will remain steady thus insuring they will never be profitable.

They did lose 2.8 billion last year despite all the increased revenues and bookings.

Just saying. Because I'm not good at reading charts.


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## The Gift of Fish (Mar 17, 2017)

Maven said:


>


Or, to say the same thing in a different way, "no matter how many rides we give, we still lose the same amount of money".
And we are supposed to be... _impressed_... by this?

It's better than saying, "we gave double the rides and lost double the amount of money". But damn, talk about setting the bar low.


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## uberdriverfornow (Jan 10, 2016)

lol as we saw in the other thread, the more Uber makes the more it loses 

they should be making billions but instead they're losing billions, only an idiot can pull this off


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## TwoFiddyMile (Mar 13, 2015)

They count a $14 pool ride as $14 revenue. Don't know what smoke and mirrors the IRS is letting them use to claim this, but read the article it's a mind blower.


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## Jesusdrivesuber (Jan 5, 2017)

So:

"Lewk guyz, pool is increasing our booking revenues but we still lose money"

This comes to show, never do 2-3-4 man pools and start dropping short trips that aren't surged.


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## Dutch-Ub (Mar 1, 2016)

We'll be paying for these loses. Best case scenario, they up the rates by 20%, of wich driver takes none. Done.


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## cho (Mar 26, 2016)

Wonder what expenses they're claiming that produce those losses?


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## Ca$h4 (Aug 12, 2015)

TwoFiddyMile said:


> "Uber counts the entire amount of an Uber pool fare as revenue".
> 
> Hence the conspiracy to convert everything to Pool.


This is Uber Accounting. No GAAP, (generally accepted accounting principles). We know Uber has no Principles, so why use accounting principles? These numbers will be roasted in the next week.


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## TwoFiddyMile (Mar 13, 2015)

Ca$h4 said:


> This is Uber Accounting. No GAAP, (generally accepted accounting principles). We know Uber has no Principles, so why use accounting principles? These numbers will be roasted in the next week.


Roasted over fire and crammed with Hershey bars marshmallow between Graham crackers.
UberSmores.


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## Ca$h4 (Aug 12, 2015)

TwoFiddyMile said:


> Roasted over fire and crammed with Hershey bars marshmallow between Graham crackers.
> UberSmores.


From Forbes.

*Caution Ahead: Uber's Financials Reveal Staggering Growth But Raise Many Questions*

Mark Rogowsky ,

Contributor

I write about technology, trends and companies on the leading edge.

Opinions expressed by Forbes Contributors are their own.

When facing bad public relations, one of the oldest plays in the playbook is to try and change the narrative. Execs are departing? You're being sued over possibly stolen technology? Stories of sexual harassment in the workplace are making national news? How about you openly share some of your heretofore mostly secret financial performance to get people focused on some cold, hard numbers, instead? Whether this is literally what went on in the minds of the executive team at Uber, yesterday's data dump showing that Uber booked a staggering $20 billion in rides last year certainly got a lot of attention.

Unfortunately for Uber, the financials shared with _Bloomberg_, paint a decidedly mixed picture beneath that eye-popping figure. While Uber's growth has been remarkable and remains very strong as it approaches 7 years old -- business more than doubled in 2016 -- the company has yet to demonstrate a sustainable or profitable business model. Perhaps worse though is that despite at least $8 billion in cash burn Uber has little in the way of a strong competitive moat to show for its efforts.

_(Disclaimer: I worked for Uber in 2015 for the communications and policy team. All data in this report, however, is based on publicly available information about the company's growth and profitability.)_

*First, the good news*

In 2016, Uber managed to record revenue of $6.5B on those $20B in bookings. That's a "take rate" of more than 32%. Over time, Uber has been able to record a higher percentage of the cost of each ride as revenue, typically giving drivers a smaller slice of the fare. Drivers used to typically receive 80% of each ride's cost but now are clearly averaging a lower figure.

It's also true that growth _remained _strong throughout last year. Uber told _Bloomberg _$6.9 billion of the bookings came in Q4 and from other data provided made it possible to impute $5.4 billion was booked in Q3. That means just $7.7 billion was from the first half of the year and the final three months were nearly equal to the first six. That kind of growth isn't just healthy it's meteoric. By way of comparison, Facebook added about $10B to its top line last year, but that was from $17B --> $27B. Uber managed more absolute dollar growth on a smaller base. It's likely there's much more growth to come.

Indeed these booking figures have been soaring for years, from about $3B in 2014 to $9B in 2015 to last year's $20B. NYU finance professor Aswath Damodaran, a longtime Uber skeptic, suggested back in 2014 the entire global rides-for-hire market was $100B. While the growth of Uber has doubtless hurt incumbents like taxi services, it's actually _unlikely_ it has taken a 20% global share. Instead the combination of innovations Uber has delivered -- on-demand rides through an app with route tracking, upfront pricing, et al. -- has allowed it to grow the market in for-hire rides.

The figures above are all, incidentally, exclusive of China which Uber left last year through a sale of its business to rideshare giant Didi. Uber had been burning $1 billion+ in China for the past two years. The drain of that business is now a footnote on its financials and, perhaps equally importantly, allows the company to concentrate management attention elsewhere. While exiting China might not have been the desired course of action, it doubtless leaves Uber better to compete in India, Latin America, and Europe.

*Next, the not-so-good news*

All those gains in bookings are fairly easily to understand but breaking it down into financial performance is much harder. For accounting reasons, Uber correctly only records its "take" as revenue under Generally Accepted Accounting Principles, or GAAP as it's known. At least it does this most of the time. The accounting fiction Uber has operated under is that the real transaction is between rider and driver, with Uber merely a market maker. On traditional Uber rides that means the piece it claims is a "license fee" for use of the software and underlying marketplace. Priceline and Groupon similarly only book their slice of the pie as revenue, not the total amount of the hotel room or discount voucher they sell.

What's concerning with Uber is that something very different happens with UberPool, the company's shared-car service. It's an essential component of growth in that it allows for more riders without an increase in drivers. But on UberPool, the company told _Bloomberg,_ "the company counts the entire amount of an UberPool fare as revenue."

I've sent a request into the company asking to clarify why, but based on what I do know here's the likely reason: With UberPool, the company often charges a flat rate irrespective of distance traveled or otherwise discounts the offering. It then pays the driver based on a formula accounting for time and distance _whether or not _the ride ends up being shared. (For those unfamiliar, if you request an UberPool and you're the first person picked up, there's a chance you will never be matched with another ride and end up riding alone. You don't pay more when this happens, but Uber is on the hook for standard UberPool rates to the driver.)

In these cases, Uber is basically paying the driver a rate for work and charging the rider something often very different -- there's no way to claim this is any sort of license fee. The gross margin on UberPool is likely quite low, then, given that rides can be as low priced at $3-5 in some markets. But taking the price paid as revenue necessarily inflates that figure versus a traditional Uber ride even if said ride costs 2x as much. Example: Rider pays $5 for an UberPool ride, revenue = $5 -- that's often $5 x 2 or $10. By contrast, rider pays $10 for an UberX ride, Uber's revenue averages about $3.20 but the margin is only impact by the costs of payment processing, fraud, insurance, etc.

With all that, Uber grew its reported revenues from about $1.8B to $2.9B over those last two quarters of 2016. It was able to translate more than 70% of bookings growth into actual revenue and saw its loss only expand by about $60 million. But what a loss it was; Uber bled $991 million in red ink just in Q4. And here's where that gets scary: Of $2.8B in losses last year, more than 1/3 were incurred just in the fourth quarter. What that demonstrates is though the ratio of losses : revenue may be shrinking, the absolute size of the loss continues to grow.

With a self-reported $7B+ in cash still on hand and another $2.3B in available credit, Uber isn't in any short-term danger of a cash crunch. But the fact that losses have still grown with revenue suggests something approaching $1B _each quarter_ is a possible scenario for 2017. There is no precedent for these kinds of losses in startup history. Worse still is that seven years into the Uber story, it's reasonable to argue whether this business model works as currently constituted.

On Twitter, startup investor and AngelList founder Naval Ravikant suggest this isn't a problem: "If Uber raised prices 15%, it'd be profitable." Except it isn't that simple. If Uber raised prices 15% _and_ kept 100% of the increment, it would've earned an additional $3B last year -- perhaps just enough to offset its losses. If Uber raised prices and -- in a more likely scenario -- only kept the 1/3 it normally receives, the extra $750M would have covered about 1/4 of the company's loss.

Then, of course, there's the issue of whether a price increase so large would have no impact on demand. Everything I know about the company says instead that it would. Uber routinely has used lower prices to expand the number and frequency of riders. Few goods are truly inelastic and on-demand rides don't fit the model well. When they are inexpensive enough, people will find themselves in Ubers often. But if prices rise, options like transit, driving one's own car, biking, et al. begin to look much more attractive. Even if volume fell just a few percent with such a large price increase, the gap that would leave would be in the nine figures.


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## Ca$h4 (Aug 12, 2015)

*And finally, the worst news*

Underlying the assumption that Uber even could raise prices is the belief that it has created a competitive "moat" that gives it a path toward monopolistic power. There is scant evidence that's true, however. Uber has strong competition around the globe, from Lyft in the U.S. to Ola in India and a major player working against it nearly everywhere else. In attractive markets like New York City, there are numerous options, including Gett, Juno, and Via.

Uber fans tend to draw comparisons to Amazon, which long made a habit of money-losing quarters and has seemingly emerged on the other side as an unassailable force, slowly crushing its retail competition. But Amazon spent much of the last two decades creating its fortress, which consists of things like a network of distribution centers located ever closer to customers, more power over suppliers who have little choice but to sell on Amazon, and arguably the greatest loyalty program ever created in Amazon Prime.

For all the success of Uber, it has few assets to show for those billions in losses. Beloved by many customers, its brand is also among the more hated in technology. Anecdotally, I know dozens of people who will simply never do business with Uber. And the recent firestorm surrounding the company over that began with the Susan Fowler story and escalated over President Donald Trump and his travel fan has doubtless added to the #neverUber rolls. The exodus of top-level executives is rarely a good sign for recruitment; and at Uber it's a lengthening list.

Further, while it does have an excellent technology suite, there are still too many times when Uber offers a frustratingly inaccurate estimate of wait times and even untrustworthy pricing on some occasions. The closest thing to Amazon's assets is that Uber has the longest roster of drivers in nearly all markets. That bigger supply leads to shorter waits and greater availability than competitors.

Unfortunately for Uber, it's often at odds with those drivers as it cuts rates, pushes UberPool (where drivers are convinced they earn less), and fights them in court over whether they ought to be treated as employees. Drivers very frequently take advantage of their freedom as independent contractors to work for multiple services and few express much loyalty toward Uber. Further, unlike an Amazon distribution center in Northern Virginia that might serve the D.C. metro area for decades to come, Uber's driver pool consists of a lot of transient part timers, many recent immigrants who will likely be in shorter supply for the next several years, and retirees who typically won't be Ubering forever.

Yet even if Uber somehow turns around its driver relations, a goal of the recently departed executive Jeff Jones that seems far distant, it still faces a reality that other recent tech giants haven't deal with: Uber is not a returns-to-scale business. Facebook's giant user base allows it to sell more and more advertising without significantly growing its headcount. Netflix might spend millions on a new show but can stream it to new users for pennies without paying any extra for the content. And, Amazon, for all its reliance on old-school logistics like UPS, physical goods management, and the like can ship more packages to more people over time. Partly that's robotics, partly it's more efficient methods, partly it's through acting as a market and taking a cut of others' sales. It also can fund its retail ambitious through Amazon Web Services, it's dominant hosting provider.

Uber looks more like a ground-based airline: It can't carry more people without more drivers (planes). Once it fills all the seats in an UberPool (maximizes yield), it has maxed out returns. It can't raise prices with viable competitors around (unless they match the increases). And the market for new drivers is constrained (perhaps not quite as severely as aircraft or gates at airports) by population growth, availability of other attractive jobs, affordability of vehicles, etc. Uber can do little or nothing to mitigate those.

Where does this leave the company? In a rather uncertain place. Those betting on self-driving cars to solve Uber's economics down the road are assuming that competition there won't be robust, which seems far-fetched. And in the meantime, the company is literally losing billions every year without demonstrating that its business should continue to receive the kind of investor faith it has to date. While this doesn't mean Uber is going away, it also casts doubt on whether it's poised to deliver on its $69B valuation anytime soon.


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## ABC123DEF (Jun 9, 2015)

This company is notorious for making up charts and graphs to spew nonsense and BS. Nothing to see here. Move along now.


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## dirtylee (Sep 2, 2015)

6.5/20 = 32.5% should be the real story.


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## UsedToBeAPartner (Sep 19, 2016)

It really just the same old story (or joke) that's been around for so, so many years. "Yes sir, I know that we lose a dollar for every Watermelon we sell but our plan is to make that up in volume!" If you are losing money with your current business plan you need to change your business plan as the current one is NOT working.


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## The Gift of Fish (Mar 17, 2017)

UsedToBeAPartner said:


> It really just the same old story (or joke) that's been around for so, so many years. "Yes sir, I know that we lose a dollar for every Watermelon we sell but our plan is to make that up in volume!" If you are losing money with your current business plan you need to change your business plan as the current one is NOT working.


Well, yeah. Scaling is only helpful when fixed costs are more significant in a business than its marginal costs (Amazon). Uber has little fixed cost but massive variable costs. No amount of scaling is going to help.


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## kfeels (Mar 22, 2016)

I am focused on the 4Q numbers because up-front pricing was introduced in September and gross bookings increased 28% over 3Q to $6.9 billion. From that Uber counted $2.9 billion as revenue which accounts for 42% of gross bookings. Uber keeps 25-30% of each ride depending on when a driver joined Uber. So what accounts for this difference of 42% minus (25-30%)? Uber tells us that they count the full Uber Pool fare as revenue which makes no sense from an accounting perspective. This could account for most of their 42% share of gross bookings, but what share of up-front pricing is in this number, you know the extra money that Uber takes from riders but does not split with drivers?

The author of the Forbes article makes the case that Uber cannot raise rates in competitive markets, but Uber has done just that with up-front pricing to passengers that exceeds the time/distance fare paid to drivers.

In up-front pricing, Uber has found a way to pad their revenues at the expense of riders and drivers, and Uber will never have to increase the time/distance rates for their drivers if up-front pricing is allowed to continue if it survives the legal challenge in a recent lawsuit filed in California.


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## Confused (Apr 11, 2017)

Hey ca$h4, that's a fascinating read. The numbers don't add up. That formula for uberpool revenue is nonsense, it works for uber, but does nothing for us! At the end of the day all the uberpool money doesn't belong to them, why count it this way. I don't think we (drivers) are so savvy about financials as you are, so again I would say, something doesn't sound right. Growth keeps rising but everytime you enter a new market, uber is starting at zero, growth has to rise. But by undercutting the competition, that growth just adds up to more losses. It's a big scheme and we are the guinea pigs working more for less. How long do you think we will keep this up?


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## observer (Dec 11, 2014)

Brooklyn said:


> So what they're saying is
> 
> Hey look I know we've been getting a lot of bad press and people are starting to question our losses but look we make a lot of money.. we won't show officially how much or show our losses but we make money and it's catching up to our losses but we won't tell you what it is.


It's not how much you make, it's how much you keep.


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## dirtylee (Sep 2, 2015)

Uber did raise the rates pax pay. They are just keeping all of it.


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## The Gift of Fish (Mar 17, 2017)

kfeels said:


> In up-front pricing, Uber has found a way to pad their revenues at the expense of riders and drivers, and Uber will never have to increase the time/distance rates for their drivers if up-front pricing is allowed to continue if it survives the legal challenge in a recent lawsuit filed in California.


They've already hidden the per mile and per minute rates a couple of levels deeper in their website. In order to see them now, you have to get a ride estimate from the website and then click on a green question mark, whereas before their rates were prominently displayed front and center.

I think the next move; what they're working towards, is to move away from the concept of mileage and time rates for pax and to replace it with opaque "custom quotes which vary according to distance, time of day, traffic conditions and driver availability". This will be the last step in fully de-linking pax fares from driver pay and, as you say, allow them to adjust driver pay as they see fit, totally independently of their price hikes on customers.

Regarding their revenue accounting, there's no way they can continue to claim that they are just a middleman now that there is up front pricing. They should be reporting all their takings as revenue and deducting driver payments as labor costs.


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## uberdriverfornow (Jan 10, 2016)

The Gift of Fish said:


> They've already hidden the per mile and per minute rates a couple of levels deeper in their website. In order to see them now, you have to get a ride estimate from the website and then click on a green question mark, whereas before their rates were prominently displayed front and center.
> 
> I think the next move; what they're working towards, is to move away from the concept of mileage and time rates for pax and to replace it with opaque "custom quotes which vary according to distance, time of day, traffic conditions and driver availability". This will be the last step in fully de-linking pax fares from driver pay and, as you say, allow them to adjust driver pay as they see fit, totally independently of their price hikes on customers.
> 
> Regarding their revenue accounting, there's no way they can continue to claim that they are just a middleman now that there is up front pricing. They should be reporting all their takings as revenue and deducting driver payments as labor costs.


Exactly. They can't really continue calling us independent contractors at all anymore. Since they are no longer the middle man but are basically paying us wages because of the ridiculous amount of control they have over us.


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## Maven (Feb 9, 2017)

Reprinted from Quora digest
How well is Uber doing?
by Dan Munro, Author of Casino Healthcare and Forbes Contributor
Updated Apr 10, 2017​Not well. It's hemorrhaging cash &#8230; to the tune of about $2 billion for 2016 and possibly as much as $3 billion for 2017. Also, the core service (individual rides) is largely a negative margin business. By some accounts, fares only cover about 40% of the cost of the ride.

Beyond that, the CEO has publicly declared that the venture is entirely dependent on driverless cars - *at scale*. Most scientific opinions I've read suggest that fully autonomous cars - at scale - are decades away (if ever).

Beyond the massive societal shift away from car ownership (which is still very popular), are some very real (and sober) technical obstacles.

Like Marc Andreessen - I also believe that "software is eating the world," but there's a serious vulnerability with that evolution. Software is inherently insecure - and that represents incredible risk for cars that rely entirely on software for ALL major functions. Cars have already been hacked - and the result is both crippling and chilling. The selling of that safety and security to consumers should not be underestimated because it will require a long trajectory, federal support and millions of safe actual passenger miles (think air travel).
Software has yet to cross a major ethical dilemma that really only exists in truly driverless cars. Should the software be written to protect passengers over pedestrians - or pedestrians over passengers? This isn't trivial - and it's critical - not just technically, but for consumers getting into a car where they are likely to know the logic.
The financial calculations around the cost of truly driverless cars (with additional hardware/software components) are destined to be an order of magnitude more expensive for the foreseeable future. Think of this as Microsoft Windows - times 10X complexity/cost/risk.
That's just some of the big technical hurdles for driverless cars - which Uber itself has openly stated is critical to the success of the company. Beyond these non-trivial challenges, Uber has even more specific ones.

The negative margin today with drivers may not change significantly (or enough) by eliminating the driver.
Dispatch software (part of Uber's core service) isn't proprietary or protectable. It's largely a commodity that other companies can (and have) duplicated easily.
Uber doesn't manufacture the core component on which its entire service depends - the car.
This last one is equally troubling because of the 2 core components - dispatch software and automobile manufacturing - one is a commodity (that's easy to duplicate) and the other requires &#8230; well &#8230; a whole ton of other stuff.

A more likely scenario for driverless cars - at scale - is that consumers would hail a Toyota, Cadillac, Hyundai or Lexus driverless car based on those brand attributes (and tiered pricing) - not an "Uber." It will also be a better experience (for both safety and quality) to build the experience as a single solution rather than as an amalgam from distinctly separate companies. I see big liability challenges for a blended solution from two distinctly separate companies. These issues may be insurmountable in the sense of getting competing commercial interests to agree (with precision) where the liability lines are - and for how much.

So no, I'm not that bullish on Uber's future prospects - beyond an insatiable appetite to burn risk capital on a Quixotic quest to OWN a market that may never materialize.

To date, the company has secured over $11 billion in risk capital over 15 rounds (and over 75 investors). With all this as the backdrop, I see only one remaining question. Will investors keep funding this ponzi scheme in hopes of at least recouping *some* of their investment - decades from now - which appears to be predicated on owning a large part of a market that has yet to materialize - let alone at scale?


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## Trebor (Apr 22, 2015)

"The ride-hailing giant more than *doubled gross bookings in 2016 to $20 billion*, according to financial information Uber shared with Bloomberg. *Net revenue was $6.5 billion, while adjusted net losses were $2.8 billion*, excluding the China business, which it sold last summer."

1) If they did not drop rates last year by 20% then that negative 2.8 billion would of turned into a positive 1.2 billion (give or take) since 20% of $20 billion is 4 billion. (lets not forget about the other years they dropped rates)

2) 6.5 billion of 20 billion is what? 32%? I have been under the impression drivers are charged 20-28%? How did Uber keep 32%?

Anyways, all it sounds like is Uber needs to charge about 20% more in order to become profitable.


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## FL_Dex (Nov 13, 2016)

kfeels said:


> Uber tells us that they count the full Uber Pool fare as revenue which makes no sense from an accounting perspective.


Uber claims they're following generally accepted accounting practices but, from a common sense perspective, you're exactly right. Though it does explain why Pool is the default option on the rider app in most places.


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## Ca$h4 (Aug 12, 2015)

Confused said:


> Hey ca$h4, that's a fascinating read. The numbers don't add up. That formula for uberpool revenue is nonsense, it works for uber, but does nothing for us! At the end of the day all the uberpool money doesn't belong to them, why count it this way. I don't think we (drivers) are so savvy about financials as you are, so again I would say, something doesn't sound right. Growth keeps rising but everytime you enter a new market, uber is starting at zero, growth has to rise. But by undercutting the competition, that growth just adds up to more losses. It's a big scheme and we are the guinea pigs working more for less. How long do you think we will keep this up?


Uberpeople net Driver's comments are usually ahead of the articles in spotting Uber tricks. Uber accounting for Pool will be mentioned more in articles in the coming weeks i guess because it boosts Uber revenues in a false way because Uber changed revenue accounting method. The point is: for Uber X a $40 fare is $10 revenue (25% of $40). And for UberPool a $40 fare is $40 revenue (100% of $40). It's like having two sets of books - one set real and the other for brand propaganda.


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## PrestonT (Feb 15, 2017)

TwoFiddyMile said:


> They count a $14 pool ride as $14 revenue. Don't know what smoke and mirrors the IRS is letting them use to claim this, but read the article it's a mind blower.


It's legit. Because we don't get a cut of pool fares, but rather a per mile and minute rate payment, they can book the full amount as revenue and the rate they pay us as an expense. With UberX etc., they can only count their net share, because it is a revenue split contract. The amount reported to IRS, whether it is the net shown on the Revenue line or total fare on Revenue and payout on expense, is correct. That's the real trick here, by pushing riders to Pool, they have inflated their revenue line while the net loss line still tells what we already knew, that they are operating at about the same loss.


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## Jo3030 (Jan 2, 2016)

Uber accounting aka LIES.


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## tohunt4me (Nov 23, 2015)

PrestonT said:


> It's legit. Because we don't get a cut of pool fares, but rather a per mile and minute rate payment, they can book the full amount as revenue and the rate they pay us as an expense. With UberX etc., they can only count their net share, because it is a revenue split contract. The amount reported to IRS, whether it is the net shown on the Revenue line or total fare on Revenue and payout on expense, is correct. That's the real trick here, by pushing riders to Pool, they have inflated their revenue line while the net loss line still tells what we already knew, that they are operating at about the same loss.


You left out prepaid rides where Uber robs us also.


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## kfeels (Mar 22, 2016)

PrestonT said:


> It's legit. Because we don't get a cut of pool fares, but rather a per mile and minute rate payment, they can book the full amount as revenue and the rate they pay us as an expense. With UberX etc., they can only count their net share, because it is a revenue split contract. The amount reported to IRS, whether it is the net shown on the Revenue line or total fare on Revenue and payout on expense, is correct. That's the real trick here, by pushing riders to Pool, they have inflated their revenue line while the net loss line still tells what we already knew, that they are operating at about the same loss.


I would disagree with your reasoning on UberPool. We gate paid based on time/distance and then percentage of that is paid to drivers (70-80%). The article states that Uber is counting the *whole UBerPool fare* (called gross bookings) as revenue. UberX rides are counted as net of driver payout in their revenue numbers. Why wouldn't Uber treat both as the same for revenue recognition? They are inflating their revenue numbers by including the drivers cut of the UberPool rides as their revenue.


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## tohunt4me (Nov 23, 2015)

kfeels said:


> I would disagree with your reasoning on UberPool. We gate paid based on time/distance and then percentage of that is paid to drivers (70-80%). The article states that Uber is counting the *whole UBerPool fare* (called gross bookings) as revenue. UberX rides are counted as net of driver payout in their revenue numbers. Why wouldn't Uber treat both as the same for revenue recognition? They are inflating their revenue numbers by including the drivers cut of the UberPool rides as their revenue.


So does a bus driver.
But his employer supplies the bus,the fuel,the upkeep,the cleaning.


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## kfeels (Mar 22, 2016)

tohunt4me said:


> So does a bus driver.
> But his employer supplies the bus,the fuel,the upkeep,the cleaning.


 That's my issue with upfront pricing where Uber keeps the difference when it exceeds the time/distance fare. It's my car and I pay for the fuel, maintenance and insurance yet they feel entitled to keep the money for themselves and not even share it! This is the "sharing economy" but Uber views it as the "taking economy".


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## tohunt4me (Nov 23, 2015)

kfeels said:


> That's my issue with upfront pricing where Uber keeps the difference when it exceeds the time/distance fare. It's my car and I pay for the fuel, maintenance and insurance yet they feel entitled to keep the money for themselves and not even share it! This is the "sharing economy" but Uber views it as the "taking economy".


NO NEED TO TIP !
GAS IS GOING UP !
LETS HAVE A RATE CUT !
GOT YOUR BACK !


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## PrestonT (Feb 15, 2017)

kfeels said:


> I would disagree with your reasoning on UberPool. We gate paid based on time/distance and then percentage of that is paid to drivers (70-80%). The article states that Uber is counting the *whole UBerPool fare* (called gross bookings) as revenue. UberX rides are counted as net of driver payout in their revenue numbers. Why wouldn't Uber treat both as the same for revenue recognition? They are inflating their revenue numbers by including the drivers cut of the UberPool rides as their revenue.


Because if you take an UberX, you get 75% of the sharable fare. If you take a Pool, you get 75% of your local mileage and minutes rate, completely untied to the actual fares Uber collects.

Put another way, by contract, an UberX transaction is between the driver and rider, and Uber merely facilitates the connection and collects a booking fee and 25% of the fare. With UberPool, they are violating your contract terms by making the transaction between Uber and the rider and simply paying you piecework for the driving you do.


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