Uber’s Financial Health Is Weighed Down By Expensive Growth

Morning Report: The Information recently published the fullest picture of Uber’s financial health. Here’s some takeaways.

We’ve put out scribbled summaries of Uber’s financial performance here at Crunchbase News, but The Information put out a set of “adjusted” numbers from the ridehailing company that are far more detailed than anything we’ve compiled.

It’s known that Uber is deeply unprofitable. How unprofitable, in fact, is almost shocking. The firm’s Q3 loss, for example, led us to describe its performance that quarter as a “red ink spill.” But, before this week, the breakdown of its continuing costs wasn’t clear.

Enter The Information’s chart. Here’s what stood out to us amidst the metrics that were noted as “[n]on-GAAP figures unless otherwise noted:”

  • Uber spends over $400 million a quarter (trailing two quarters) on “rider promotions,” according to the report. That means that its topline growth is more sugar-fueled than I would have expected on demand side of the equation.
  • Uber spends nearly $400 million a quarter (trailing three quarters) on “driver bonuses,” the report notes.

Pausing, we wrote before that we “suspect[ed] that Uber’s promotions to drivers (x number of rides in Y days to get bonus Z dollars) are contra-revenue.” The math in The Information’s reporting work out that way, with “net revenue” coming after promotions, bonuses, taxes, and fees.

  • Uber’s net margins after all those costs aren’t great. That’s because Uber spends far, far more on insurance than I would have guessed. The firm’s $9.7 billion in Q3’17 gross revenue (ride value) led to $1.99 billion in net revenue. From that, $965 million went to insurance. That’s about half.
  • That left Uber with a gross profit of just over $1 billion ($1.025 billion) to fund the rest of its business.
  • From that, Uber had operating costs of $1.759 billion, leading to a sharp loss.

Make those figures GAAP across the board, and they presumably get worse. There’s a lot of good in Uber’s numbers from a growth perspective. But it’s a tough ball to unravel when you check out the ways that Uber’s costs have grown.

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