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The Recent Uber Revenue/Profit Debate Explained, Part II

Editor’s Morning Note: For Christmas this year, we got new Uber numbers! It’s a slightly predictable holiday miracle occurrence!

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Spy shot of Uber’s most recent board meeting.

Uber probably won’t go public in 2017 unless its financial performance dramatically improves, according to performance numbers reported by both The Information and Bloomberg.

Continuing our theme of unpacking Uber when we can, we are taking a quick look at what is new today, and how it squares with what we knew previously.

Rewinding two weeks, we last took a look at Uber’s margin performance in the context of time: As Uber took a larger slice of gross revenue in the first half of 2016, how did its revenue quality improve? It improved somewhat. But Uber was still losing extensive sums when we last checked in.

That hasn’t changed.

The New Numbers

We’ll do this in two takes. First, The Information:

  • Uber’s third quarter net revenue totaled $1.7 billion.
  • That figure is up 240 percent from the year-ago period.
  • Uber lost $800 million in the third quarter, before various GAAP expenses.
  • The firm’s gross revenue grew 8 percent to $5.4 billion in the third quarter, impacted by the company’s “China exit.”
  • Uber’s home market losses are “more” than the prior $100 million rate reported for its second quarter.
  • UberEats could do $100 million in net revenue next year. It will lose more than $100 million in the same period.
  • The supercorn has “more than $7 billion still sitting in the bank, plus another $2 billion from a credit line.”

In summation, Uber’s decision to leave the Chinese market did not cause it to shrink—at least not yet. It also has a lot of money. But the company’s losses remain painful, and new bets are expensive.

Next, Bloomberg:

  • Uber lost “significantly” more than $2.2 billion in the first 9 months of 2016.
  • The company’s third-quarter loss was “more than $800 million, not including its Chinese operation [emphasis added].”
  • Uber’s bookings—the value of all rides taken on the platform—rose from $3.8 billion in the first quarter, to $5 billion in the second, to $5.4 billion in the third.
  • The company’s net revenue expanded from $960 million in the first quarter to $1.1 billion in the second quarter, and $1.7 billion in the third quarter.
  • Uber will lose at least $3 billion this year.

In short, Uber’s losses are going up; Uber’s bookings are going up; Uber’s net revenue is going up. And it is also Tuesday.

Cuts, Blood

When we last discussed this topic, Uber’s rising cut of bookings was notable. Estimates examined at the time showed that Uber was taking more of the total pie, something that could be construed as a show of strength by the ridesharing company.

Our new information paints an even more dramatic picture. The Information’s data, for example, shows Uber with a 31 percent effective cut of bookings, a far higher figure than we saw before. It’s also more than I expected.

Asking around, it seems that the percent is going higher not only due to Uber taking a higher percent of driver fares—though I have heard reports from SF Uber drivers that their cut has fallen from 75 percent to 72 percent—but also through other costs like safe ride fees, granting the company a higher percentage of aggregate bookings without cutting driver incomes.

Of course, Uber is still taking a larger slice of the total dollars riders are willing to spend, something that drivers I am sure will find at least slightly irksome.

IPO-Oh-No

Off the back of a three billion dollar loss for the year, Uber is not going public anytime soon.

Uber, in my view, cannot go public until a few things have happened, including sustainable profit in its home market, falling losses in other markets, constrained R&D costs across the firm, and proof that some of its other bets, like UberEats, can at least break even.

So Travis is correct that Uber is not ready to go public. Then again, if I had access to $9 billion in capital, I wouldn’t be in a rush either.

What we can take away today is that the Uber experiment continues. And if Uber can’t make it work, well, shit.

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© Mattermark 2017. Sources: Mattermark Research, Crunchbase, AngelList.
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