Notes from Uber’s earnings call

Uber released their 2019 Q2 results and earnings today. Below are a few things that are worth noting to me

Take rate

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 2018Q2 2019
Ridesharing Take Rate21.86%18.99%
Uber Eats Take Rate12.4%9.95%
Total Core Platform Take Rate20.96%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.

Source: Uber

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 BookingsCore Platform Gross BookingsMonthly Active Platform Consumers
Q2 2019 YoY Growth29.67%30.44%30.26%
Q2 2018 YoY Growth48.64%47.92%33%

TripsAdjusted Net RevenueCore Platform Adjusted Net Rev
Q2 2019 YoY Growth35.02%12%7%
Q2 2018 YoY Growth39.71%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

Spectacular loss

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%.

Thoughts

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.

Uber’s Earnings – Is It On The Right Track?

Uber released its first quarterly earnings as a publicly traded company. Let’s take a look how they did.

First of all, I have to say that reading Uber’s earnings isn’t a straightforward task. They make it incredibly confusing and complex. For instance, there are multiple variables concerning the company’s money-generating ability such as Bookings, Revenue, Core Platform Adjusted Net Revenue, Adjusted Net Revenue. I wish they could make it easier for the audience to absorb the information.

The company lost more than $1bn in the first quarter mainly due to bigger cost of revenue and S&M expense

Source: Uber

Bookings, revenue and net revenue increased, but at a much slower clip than Q1 2018

Source: Uber
Source: Uber
Source: Uber

Monthly trips per user are stagnant while contribution margin is negative

Source: Uber
Source: Uber

Uber Eats revenue grew by 89%, but Uber tripled the driver incentives for the segment

Source: Uber
Source: Uber

In terms of segments, Vehicle Solutions and Latin America market performed poorly compared to Q1 2018

Source: Uber

Ride-sharing’s revenue grew while incentives contracted; which is good news

Source: Uber

Thoughts

Uber seems to be a story of contradiction. While the CEO claimed that “Sometimes simplicity is a beautiful thing”, the business, by no means, is presented in a simple fashion. It’s complex and the terms used by the executives don’t necessarily facilitate easy understanding.

Uber CEO also said “Our job is to grow fast at scale and more efficiently for a long, long time.” Bookings, users and all metrics increased indeed. Yet, as presented above, they grew at a slower clip than one year ago. The tripled incentives used to fuel growth in Uber Eats aren’t exactly evidence for the efficiency he mentioned, and neither is the S&M expense.

The company lost $1bn and the business model doesn’t seem to change much. Also, I don’t believe in the short term feasibility of autonomous vehicles’ impact on Uber. It’s unclear how the company can tackle the profitability question. On the earnings call, Dara mentioned competing on brand and products instead of pricing with competitors. Well, whether that plan comes into beings still remains to be seen.