Coronavirus Clobbers Uber, Leading To $1.8 Billion Quarterly Loss (arstechnica.com) 50
In the second quarter of 2020, Uber announced that its ride-hailing business plunged by 75 percent compared with a year earlier -- from $12.2 billion to $3 billion. "That was offset somewhat by rapid growth in Uber's delivery business," reports Ars Technica. "Delivery bookings more than doubled from $3.4 billion to $7 billion." From the report: The company lost $1.8 billion in the second quarter on a GAAP basis. Ignoring one-time charges, Uber has been losing around $1 billion per quarter for the last couple of years. Prior to the pandemic, Uber CEO Dara Khosrowshahi was bullish about the company's financial future. After reporting a $1.1 billion loss for the fourth quarter of 2019, Khosrowshahi said in February that he expected Uber to start generating a profit by the end of 2020.
At the time, Uber's rides business was (just barely) profitable. But it was being dragged down by big losses from Uber Eats, where Uber was spending heavily in pursuit of growth. Uber expected the rides business to become more profitable over time, while losses in the delivery business would decline as growth slowed. But then the coronavirus hit, and Uber was forced to throw those projections out the window. In May, Uber laid off 3,700 people in an effort to contain mounting losses. [...] Fortunately, Uber is in no danger of running out of money; it has almost $8 billion in cash and short-term investments. It could easily burn cash at this rate for another year.
At the time, Uber's rides business was (just barely) profitable. But it was being dragged down by big losses from Uber Eats, where Uber was spending heavily in pursuit of growth. Uber expected the rides business to become more profitable over time, while losses in the delivery business would decline as growth slowed. But then the coronavirus hit, and Uber was forced to throw those projections out the window. In May, Uber laid off 3,700 people in an effort to contain mounting losses. [...] Fortunately, Uber is in no danger of running out of money; it has almost $8 billion in cash and short-term investments. It could easily burn cash at this rate for another year.
That's alright (Score:1)
The money doesn't really exist anyway. It's all phantom derivatives
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Re:Expenses? (Score:5, Informative)
They pay the drivers more than the fares generate.
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They pay the drivers more than the fares generate.
Maybe it's just me but that sounds like a bad business model.
I'm just a simple country boy and don't know about all this high finance shit, but I once heard that businesses have to do something called "turn a profit". Any Economic majors here wanna weigh in on that?
Re:Expenses? (Score:4, Informative)
They're playing a long game - they want to squeeze out all the competitors, then raise fares and reduce driver pay. It's effectively a form of dumping, which is illegal. They only need to keep fares low while faced with competition for customers, and they only need to keep driver pay acceptable while faced with competition from other employers.
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How is that sustainable?
You need a spreadsheet to understand it.
TLDR version: If you have X amount of income per year then you can afford to lose X/n amount of money until you become an unassailable monopoly, at which point you raise your prices and earn X*p per year indefinitely, where 'p' is greater than 'n'. All it takes is financing to get it over the initial hump.
You should be looking at these figures and thinking that now is the time to invest because if Uber did badly then everybody else did worse.
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They pay the drivers more than the fares generate.
In other words, Uber should not complain about but rather be happy with the Coronavirus since fewer rides = smaller loss.
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Losses don't matter. Uber bosses will be laughing at the journalists who write this ignorant crap.
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It's worse than that.
Revenue - $10 Billion (3 from Uber, 7 from Uber Eats). They reported a loss of 1.8 Billion, which means they spent the entire 10 billion plus another 1.8 Billion on top of that.
Total spending is $11.8 Billion. -->> IN ONE QUARTER !!
Simple math should tell you they only need to raise prices by 20% to start earning huge profits.
The longer they wait, the more they can eventually increase their prices because nobody else will be able to finance their way into the market.
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Can someone please explain what Uber's expenses are?
Surely they could host their apps for a couple of million a year. Where is the other $1.798 billion going? Executive bonuses?
This is their breakdown
Start with their revenue of $2.241 billion. Now start deducting their costs and expenses...
- Cost of revenue, exclusive of depreciation and amortization = $1.252 billion
- Operations and support = $582 million
- Sales and marketing = $736 million
- Research and development = $584 million
- General and administrative = $565 million
- Depreciation and amortization = $129 million
Total costs and expenses = $3.848 billion
$2.241 billion in revenue
- $3.848 billion total costs and expenses
________
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Rider discounts...fall under their "sales and marketing" category.
Nope.
From Uber's S-1 IPO filing. Note the part about consumer discounts and promotions
https://www.sec.gov/Archives/edgar/data/1543151/000119312519103850/d647752ds1.htm [sec.gov]
Sales and Marketing
We market our offerings to platform users directly through brand advertising and direct marketing. We use broad-based promotional campaigns, such as television ads, including our “Doors Are Always Opening” campaign, to promote opportunities our platform provides. Our direct marketing primarily consists of consumer dis
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I'm not going to defend uber, because they're awful.
But there's always someone who hasn't thought through very much and kinda only at the most narrow aspect of the code who assumes it can be done all cheaply.
Here's some of what's involved (and third isn't going to be anything like all of it)
iOS app. Not terribly hard but not trivial.
Android app that works on every awful android phone. This is much harder than you expect.
They need UI and UX people to actually design the thing because few people want a user i
Re: Expenses? (Score:2)
best post ever, thanks... don't know if this is a blueprint how to be a sociopath or world class CTO but either way it works
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Eh? It's not a blueprint for anything.
It's a very very rough rundown of what it actually takes to run a business of this sort. A company that books $10 billion in gross revenue is not a trivial operation. There's a lot of very narrow minded programmers out there who think that coding is really hard (that's why they're so good, they do something really hard) therefore everything else is much easier. And they reckon it's not too hard to write the only bits of they app they've thought of, and that's the hardes
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Android app that works on every awful android phone. This is much harder than you expect.
Android only works on ICS and later, and that's when Google got Android working worth a shit. I don't think this is as hard as you think it is. The Uber app is ultimately not that complicated, and it uses other people's components to do the heavy lifting.
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And fines. Lots of fines.
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Look at the pie chart at the bottom of this article (it's for 2Q 2018. Current numbers are probably worse): https://news.crunchbase.com/ne... [crunchbase.com]
They spend $700M on sales and marketing and another $700M combined for R&D and operations and support. I put those two categories together because I'm not sure how much R&D is needed to run servers and logistics for a company this size, but find it hard to believe they're wasting it on things like self-driving vehicles.
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They gave me free food, effectively. Gave me a 50% off offer on a shop I use all the time. So they basically paid a guy to bring me food for free, from a takeaway I use all the time, and gave me GBP10 of free food on top of that.
There are promotional offers, obviously, where you try to encourage custom, but they are basically losing money hand over fist on such things, as part of their normal business model.
Uber is cheaper than a mini-cab, and yet the people who drive for Uber are just mini-cab drivers, a
Re: Expenses? (Score:2)
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UberEats? (Score:2)
I am surprised UberEats is losing money too. I am in lockdown and working from home. I got my lunches from UberEats every day this week. I have never used them before.
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On one hand, it's a mistake to think that everyone is like you. On the other hand, it's also a mistake to think that no one is like you.
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I used each of their services once.
Once landed at an airport in London at a time of night when it was then made plain that there were no trains, none, that's it, done, finished, come back in 6 hours. Why the hell are you not running trains while planes are still landing?
Okay, I should have checked - I live in London and it's only a 20 minute train ride, but come on.
Options were buses, taxi-rank taxis, or Uber. Uber was cheaper by far (which says a lot about their profitability). Haven't used them since.
T
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My excuse is that I am recovering from surgury. I live in Melbourne and am unable to go out to buy food for much of the time due to our covid lockdown. My son is studying from home in my place during the day and my employer gave me an ubereats voucher to help out with my working days.
Someday (Score:2)
"Coronavirus Clobbers Uber, Leading To $1.8 Billion Quarterly Loss"
Someday I hope to be rich enough to lose $1.8 Billion.
Death Cab for Cutie (Score:2)
I would get some uber eats.
I have no desire to sit in a Toyota with a stranger for hours.
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I mean, every time I ever ride in an Uber of a Lyft I make it a point to cut the biggest, meanest, most foul-smelling fart in the car right before I get to my destination.
Just wait 'til you see what people do when these cars finally become driverless. They'll be spitting on the handles and taking huge dumps before getting out.
I'll want mine to be fully self-washing and disinfecting before I consider getting inside one.
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I mean, every time I ever ride in an Uber of a Lyft I make it a point to cut the biggest, meanest, most foul-smelling fart in the car right before I get to my destination.
Just wait 'til you see what people do when these cars finally become driverless. They'll be spitting on the handles and taking huge dumps before getting out.
I'll want mine to be fully self-washing and disinfecting before I consider getting inside one.
In this day and age, this is one of the problems I have with these services, and most public transportation for that matter. When I sit in a subway and it smells like piss and sweat, I have to reconsider just fighting traffic with my own car. It's a far more enjoyable experience, and I don't have to worry about sitting in a pile of puke or something else. Someone should get a blacklight in these things.
When you add the expense of self-disinfecting, short of blasting the entire cab with UV-C, it probably a
No danger? (Score:2)
That actually sounds like Uber is forked. They're definitely not within a year of breaking even. Even before COVID, they were blowing 4 billion plus a year, as they always have. That doesn't just suddenly turn around.
They can certainly run out of money (Score:1)
$1.8 billion quarterly loss? Isn't that normal? (Score:4, Insightful)
Or does it usually take a whole year for them to lose that much?
Oh dear (Score:2)
never mind.
It's not their money, why should they care when the execs are all still getting paid?
Quarterly losses increase no matter whatever (Score:2)
That's the Uber business model. Enough su**ers to put in more new money.
Because .... (Score:2)
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... getting in a car with unregulated strangers makes perfect sense in normal times ...
I don't know where you live, or what taxicabs are like there, but here in the USA the strangers driving them are also essentially unregulated, and so are the vehicles. I've been in taxicabs where the drivers had an apparent deathwish, and I've been in taxicabs where the taxis were clearly essentially unmaintained, and the vehicles made alarming noises during the trip. Uber might not be any better, but it can't be any worse. The only thing I've been cross about while taking an Uber is that the driver wouldn
Reaction to (Score:2)
>"Coronavirus Clobbers Uber, Leading To $1.8 Billion Quarterly Loss"
No, the REACTION to the Coronavirus Clobbers Uber, Leading To $1.8 Billion Quarterly Loss. There is a big difference. The policies, news coverage, individual action/reaction, are far more responsible than the virus, itself.