Uber Reports Adjusted Revenues And Slimming Losses In Q2'17

Uber continued its regular schedule of partial financial releases. Today, it detailed its second quarter 2017 results to Axios.

The disclosure comes after the firm released parts of its third and fourth quarter 2016 results as well as elements from its financial performance in the first quarter of this year. The company’s preliminary second quarter 2017 results were also detailed.

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Uber’s latest figures are the usual slurry of confusion. Regardless, it seems that the media narrative concerning the company’s new results is positive. We’re going to put to the test how deserving that positivity is.

The Numbers In Context

To give you enough background to understand Uber’s results, we’ve gone back through our own work, and the work of some people we love, to compile a running list of what we know about Uber.

To ensure that we don’t cross wires, we’re using only numbers that are sourced from the company.

Let’s start at the top of Uber’s funnel with gross bookings (data compiled from our past Q3’16, Q4’16, Q1’17, Q2’17 reporting, Bloomberg, and the new Axios piece):

Q3’16 gross bookings: $5.4 billion.
- Via Q4’16 result and reported sequential-quarter growth pace¹.
Q4’16 gross bookings: $6.9 billion.
Q1’17 gross bookings: $7.5 billion.
Q2’17 gross bookings: $8.7 billion.

That works out to the following sequential-quarter gross bookings percentage growth:

Q4’16 gross bookings: 28 percent.
Q1’17 gross bookings: 8.7 percent.
Q2’17 gross bookings: 17 percent.
- As reported, 16 percent by rough math.

(Note: We lack Q3’16 gross bookings because we do not have Q2’16 number to measure from):

So Uber’s growth is a bit up-and-down, at least from a gross bookings perspective. What that means is up to you. I don’t know how seasonable Uber’s business is, but the firm still grew in the first quarter on a gross bookings basis and re-accelerated. Not bad.

Next, we’ll dig into net revenue, which has some problems:

Q3’16 net revenue: $1.66 billion.
- Via Q4’16 result and reported sequential-quarter growth pace.
Q4’16 net revenue: $2.9 billion.
Q1’17 net revenue: $3.4 billion.
Q2’17 net revenue: $1.75 billion.

I suspect you are confused, and it’s mostly because I wanted you to be. Why, you ask, is Uber’s second quarter 2017 revenue so small compared to the firm’s Q1 2017 number, when its gross bookings rose?

Because the numbers that come before Q2’17 are “unadjusted net revenue,” which is an odd phrase that means, in Uber’s case, that the firm counts UberPool gross bookings as net revenue. That inflated the firm’s net revenue, giving us, in part, the firm’s comically large Q3 2016 to Q4 2016 jump in revenue.

If my understanding holds up, the adjusted net revenue number treats Pool top line as gross bookings and Uber’s cut as net revenue. (Things are changing on this accounting front; we want the adjusted net revenue in this case, as it is closer to god and so forth.)

Two things from Axios help make all this a bit clearer. First, the adjusted net revenue results we actually care about are as follows:

Adjusted net revenue was $1.75 billion in Q2 vs $1.5 billion in Q1 and around $800 million in Q2 2016.

Here’s why the company reported its adjusted net revenue, and not the far larger, unadjusted (and soon to be archaic) number:

Revenue note: Uber is no longer reporting unadjusted net revenue to its investors due to new guidance from the SEC.

So the company’s revenue is more modest than we might have thought. Growing its top line from $1.5 billion to $1.75 billion in a single quarter is nothing to sneeze at, but the smaller revenue results make the company’s losses seem all the larger in comparison.

Let’s explore those losses. Quickly, in temporal order, with notes along the way:

Q3’16 adjusted loss: $934 million non-inclusive of “employee stock compensation, certain real-estate investments, automobile purchases and other expenses” according to Bloomberg.
- - Via Q4’16 result and reported sequential-quarter growth pace.
Q4’16 adjusted loss: $991 million, non-inclusive of “employee stock compensation, certain real-estate investments, automobile purchases and other expenses” according to Bloomberg.
Q1’17 adjusted loss of $708 million, a result that excludes “stock compensation and other items” according to the Wall Street Journal.
- EBITDA loss of $598 million in the period, according to Axios’ most recent piece.
Q2’17 EBITDA loss of $534 million.
- Axios notes that the figure rises to $645 million when we look at “adjusted EBIT” instead.

Update: Silly me didn’t note that Axios included a more apples-to-apples adjusted loss number for Q2’17: $645 million (heavily adjusted, bear in mind), off around 9 percent from the preceding quarter.

Can you find the truth there? Only that it seems that the company is directionally losing less money over time. But bear in mind that the company’s GAAP net loss results will be far steeper. Uber, for example, is known for paying employees more heavily on stock than cash compared to other firms. Those costs will resurface.

What Did Any Of That Mean?

To lean on bullet points one more time, let’s quickly distill the above into a few shots you can take before you go:

Uber’s gross bookings growth is uneven, but still expanding quickly on a sequential-quarter basis.
That some of the unevenness is predicated on seasonality is possible, but it’s unclear.
The firm’s adjusted net revenue matters more than its unadjusted net revenue, meaning that the firm is about half as big as some previously thought.
Uber grew its adjusted net revenue by $250 million in the second quarter or just under 17 percent.
That growth pace matches the expansion in Uber’s gross bookings during the period, perhaps implying that the firm is maintaining its cut of rides it facilitates.
The firm could be losing less money over time, but it isn’t entirely clear given the amount of adjusting going on in reported numbers.

In case that sounds a bit negative, let’s end with a plus sign: what’s good for Uber? Axios, take us home: