Feb 9

Let’s discuss on Uber today

1. Uber is going profitable this year, which means one year sooner than expected (Finimize)

What’s going on?

Uber reported better-than-expected quarterly results last week, then also revealed that it will become profitable at the end of this year.

Zooming out

Early profitable prediction comes from two reasons”

• Revenue is rising: booking revenue grows 70% in UberEats and 30% overall
• Cost is reducing. The new CEO is doing what he promised: cut off marketing expenses, laid off workers and abandon unprofitable business (selling UberEats in India)

2. Looking deep in Uber’s earning report, and how Uber makes money what happened? (Investopedia)

First we need to know that, Rides is the bread-and-butter of Uber (76% revenue) and it is profitable (yeh, but still with generous accounting method). The peripheral two are Eats (16%) and Freights (7%) are growing precipitously but making losses, especially “Eats”. At the end of last year, Uber focused on minimizing loss from this branch.

Second, Uber free cash flow is improving, from the loss of -$1,070B (Q2,2019) and -$1,007B (Q3,2019) to -$270,2B (Q4,2019). With further cost cutting measures that the new CEO Dara Khosrowshahi pledged, the company is reaching the crucial milestone of positive FCF. 

3. The growing threats that could delay Uber’s profitability pathways

• California, a new gig work law is limiting Uber’s ability to classify its drivers as independent contractors. (Cnet)
• Uber loses its London license as regulator cites a ‘pattern of failures’ (TheVerge)
• Car-booking app Ola (from India) aims to overtake Uber in London. What I do not understand is that both of these companies are Softback-backed… (YahooFinance)

Even the self-driving car Waymo is a big threat (Investopedia)