Uber released their 2019 Q2 results and earnings today. Below are a few things that are worth noting to me
Uber defines take-rate as adjusted net revenue divided by Gross Bookings. Basically it is how much Uber takes out of your trip’s fare. Compared to Q2 2018, all take rates went down
|Q2 2018||Q2 2019|
|Ridesharing Take Rate||21.86%||18.99%|
|Uber Eats Take Rate||12.4%||9.95%|
|Total Core Platform Take Rate||20.96%||17.20%|
Part of the reason for the drop in take-rate is the rise of Excessive Driver Incentives. For instance, Uber Eats’ Excessive Driver Incentive this quarter went to 43% of the revenue, compared to 36% in Q2 2018.
Story of Growth?
It’s no secret that Uber is not profitable and likely won’t be for a while. Their story is one of growth, which is not the case in this quarter as far as I am concerned
|Gross Bookings||Core Platform Gross Bookings||Monthly Active Platform Consumers|
|Q2 2019 YoY Growth||29.67%||30.44%||30.26%|
|Q2 2018 YoY Growth||48.64%||47.92%||33%|
|Trips||Adjusted Net Revenue||Core Platform Adjusted Net Rev|
|Q2 2019 YoY Growth||35.02%||12%||7%|
|Q2 2018 YoY Growth||39.71%||58%||54%|
Every metric saw a smaller growth this quarter compared to last year. I do get the laws of big numbers, but when your story is one of growth, this may raise a few concerns.
Among important markets, Latin America saw a 24% decline this quarter despite Buenos Aires becoming the fifth largest city based on trips
Uber reported a $5.5 billion loss from Operations. If we take away the stock-based compensation, the loss is still $1.4 billion. While revenue grew by 31%, the operational loss increased by some 89%.
In my opinion, there is nothing in the earnings call from Uber that conveys something remotely close to a clear path to profitability. The story of growth is challenged in this quarter. Perhaps, this is just a bad quarter and the next ones will be better. Or worse. Who knows? Self-driving cars are years and years away, not even 5 years from now. Uber also faces heightened competition in food deliver like Post Mates or Door Dash, companies that attracts big private money as well.