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Home / Business / How can a company lose $ 5.2 billion in revenue of $ 3.2 billion? Uber shows how

How can a company lose $ 5.2 billion in revenue of $ 3.2 billion? Uber shows how



And the revenue from carpooling stagnates.

Uber's losses have been legendary for years, ever since they became known to the public when it was still a private company. But that needs the cake. Uber reported tonight that it had lost $ 5.24 billion in the quarter ended June 30. The thing is, Uber reported sales of only $ 3.2 billion. In other words, the net loss exceeded sales by $ 2 billion. That takes some time.

The loss of $ 5.24 billion added to the loss of $ 878 million in the first quarter. Overall, Uber lost $ 6.25 billion in the first half of 2019. Total revenue for the two quarters was $ 6.3 billion. The chart of Uber's "loss from operations", which includes interest expense ($ 368 million in the first half of the year) and other income (expense), such as For example, the profit from the sale of shares in Grab and Yandex last year, this shows the total annual totals from 201

4 to 2018 and the total of the first half of 2019:

Lyft, Uber's largest competitor in The US, announced yesterday that its $ 867 million second-quarter revenue had caused a loss of $ 644 million. And that in the first half of the year sales of 1.64 billion US dollars caused a loss of 1.78 billion US dollars.

You see, this phenomenon of established global companies, where thousands of employees are causing as much or more losses as they have in terms of revenue short-circuit my old-fashioned thinking.

Uber has been around for a decade, and it has already spent billions of dollars of investor money to get where it is today, and there is still no functioning business model in sight.

How did Uber lose $ 5.2 billion in $ 3.2 billion in revenue?

Of course, the company does not want you to look at your business like this. In his report, it is clear what, how and what to look for and what to ignore on purpose. This is high on the press release:

"Our platform strategy continues to deliver strong results: trips increased 35% and gross bookings [not including what drivers get paid] currency-neutral 37% year-on-year."

OK, despite all the big rush and fierce growth of these metrics the actual revenue only increased by 14%.

"In July, the Uber platform reached over 100 million active months of Platform Consumers for the first time as we became more and more a part of everyday life in cities around the world. "

Sure, but who pays? The check is split in two ways: the users pay part of it and the investors pay the other part by digging deep into their pockets to subsidize each trip.

And one more thing: 14% Topline Growth is not high company. And this 14% was far below the previous growth rates. For example, revenues increased 52% in the second quarter of 2018.

By region: In Latin America, sales decreased by 24%, in the US and Canada, where most of the business is in the EU, by 19%. In Africa, the Middle East and Africa, sales increased by 22% and in Asia by 13%.

stagnation of rideshare.

Sales growth in its core business, the Ride Hail Service, increased only slightly by 2% to $ 2.3 billion. The technical term for this is stagnation.

To avoid this stagnation, Uber entered an e-bike service (Jump), Uber Freight and the latest fad, food delivery. Other Bets revenue increased 175% to $ 195 million. And Uber Eats sales increased 72% to $ 595 million. All these things lose money with your hand over your fist.

These losses of $ 5.24 billion include the $ 300 million cost of the Driver Appreciation Award – these damned drivers – in connection with the IPO. And it included the $ 3.9 billion share-based compensation expense associated with the IPO.

Based on cash-burn-from-operations – cash flow from operating activities – the company reported first-half usage in the US $ 1.64 billion.

But Uber will not have any money in the near future. It has already pulled away so much from investors, even during the IPO, that it still brings in just under $ 12 billion in cash, cash equivalents and restricted cash. Even Uber will take some time to burn everything.

Nobody – least of all the executives at Uber – seems to have an idea of ​​how to achieve profitability, or at least a self-sustaining business model. For years it was hoped that Uber would replace these expensive drivers with driverless cars.

The autonomous cars would be capital intensive, but the capital is cheap or free (like the funds raised during the IPO) and even underpaid people are too expensive for Uber. And since there are no drivers, there are no problems with the drivers. This plan looked great – until one of Uber's self-propelled prototypes (with a human on board) killed a pedestrian.

Instead of showing a clear and short path to profitability, CEO Dara Khosrowshahi blinded us with vagueness during the conference call: "Greetings," he said, "should turn out to be a spectacular business in the long term."

The business is already spectacular in terms of its losses.

And "long-term" includes hopes – which were pushed further and further – that autonomous vehicles finally make it far enough to replace these expensive human drivers at a reasonable cost, without mowing too many pedestrians. Meanwhile, the losses are increasing. And the carpool revenues stagnate.

The rides industry is a peculiar creature: it has almost destroyed the taxi business – which was ripe for a big shock – because it can evade taxi regulations and burn large amounts of money while taxi companies have to stick to the taxi rules and make money or get out of the business – because the investors of taxi companies are not prepared to finance losses.

But rally investors were amazed by the promise, who knows what all, and they are anxious to finance these losses year after year with no end in sight.

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