
Uber Announces Results for Fourth Quarter and Full Year 2019 - gok
https://investor.uber.com/news-events/news/press-release-details/2020/Uber-Announces-Results-for-Fourth-Quarter-and-Full-Year-2019/default.aspx
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nknealk
My highlights from the accounting statements (disclaimer: I'm 2 years into my
MBA):

* They put up $1.2B as collateral for some kind of insurance (looks like rider insurance, but it's unclear). From the footnotes: "In Q4 2019, James River Group withdrew all funds held in trust as collateral for current and future claim settlement obligations under the indemnification agreement. The $1.2 billion of operating cash outflow for 2019 represents this withdrawal of collateral from restricted cash. This change in the form of collateral had no impact on our claim settlement obligations or insurance reserves." Sounds like maybe their insurer dropped them?

* Under "Reconciliations of Non-GAAP Measures" \-- the driver incentives are unreal. To deliver $734M of gross revenue on Eats in Q4, they paid out $315M in driver incentives. From the "Segment Adjusted EBITDA" at the top, Eats had EBITDA of (461). As a SWAG, for $1 in sales, they pay out about $0.42 in driver incentives and another $1.20 in all other costs (ie. the restaurant's cut for the food itself, operations support, marketing, normal driver's fees, etc).

* As a counter point to the above, to render $3B in rides revenue they paid $0.007B in driver incentives.

~~~
three_seagrass
Did they put that much up for insurance though? The delta between 18 and 19 is
only about $200M.

Uber also tripled it's R&D budget, which may be a good sign for the company,
but it looks like it's primarily stock-based compensation.

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nojvek
> Airport business outgrows overall Rides - In Q4 2019 our Airport business
> outgrew overall Rides. We now serve over 650 airports globally and continue
> to see our airport riders prefer our premium products. In 2020, we will
> continue to roll out our PIN product (riders receive a PIN and take it to
> the driver next in line rather than seeking out a specific driver), which
> has been well-received by riders and by airports.

Didn’t realize Airports would be such big business.

Overall it seems Uber is growing >20% in rides, trips and active users.

I remember when Facebook was valued at 100B without profits and I thought it
was absurd. Now they’re a money raining machine with 500B valuation.

Year 2019

Total trips: 6.9 Billion Total bookings: $65 Billion Net revenue: $12.8
Billion

So they’re taking ~20% cut from every trip.

If Uber can reduce burn and be profitable this year, I’m willing to bet $1000,
they’ll be >100B by end of 2021.

Uber eats and freight grew 70%. Wow!

Overall I think if Uber can maintain their market dominance for another decade
or so while self driving cars really become viable and people trust them, I
can see Uber easily being as large as Facebook.

~~~
hyperbovine
Facebook is a software business. Its cost for acquiring new users is zero, and
every new user makes them money. Uber is a traditional company with
traditional expenses that wants you to believe it’s a software company. Big
difference.

~~~
listenallyall
Not buying that argument. Facebook just ran a Super Bowl ad, which cost over
$10 million just for 60 seconds of airtime (plus who knows how much they paid
for production and celebrities). That's part of user acquisition. And it
certainly doesn't cost zero to attract advertisers (especially large corporate
ones) who actually provide revenue.

In both cases, they are so ubiquitous that they aren't really after new users,
just increased engagement/usage. And I'd bet Uber's per-user usage growth
exceeds Facebook's right now.

~~~
philsnow
It was also their first super bowl ad ever, so they grew to their size without
needing big ads.

~~~
hyperbovine
The message of that ad has nothing to do with introducing their product to the
five remaining people on Earth who do not know about FB. The message of that
ad is, "Hi we're Facebook, sorry about the whole election thing, oh and please
do not regulate us."

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tmh79
RE: eats incentive spend. Its a cash bonfire with Doordash and UE competing
domestically, and a lot of other softbank funded delivery groups including
uber eats competing in south america. It seems like that late stage financing
has dried up so likely to see rationalization in this vertical.

~~~
rconti
At least with ride hailing we got cheap, convenient rides for a subsidized
price.

For food delivery, we get overpriced (upcharged) food, plus a delivery fee,
for cold food that takes forever to show up.

~~~
wpietri
It really does amaze me how much worse the delivery experience has gotten in
the last few years. Prices are way up, and the additional complexity means
deliveries are less reliable and less predictable. Which makes a lot of sense,
really. If a restaurant advertised delivery previously, they had delivery
employees and treated it like an important aspect of their experience. Now
it's really not clear who, if anybody, is responsible for ensuring a good
experience.

~~~
unlinked_dll
I use UE more than I care to admit and while the prices can suck the only
weirdness I've seen is people lie about riding bikes, a lot.

I think there's an incentive for bike riders so I don't report it (not like
they're paid well anyway) but it is odd.

~~~
matthewowen
I think bike riders get extra information about orders (presumably so they can
refuse orders that they can't carry), but obviously car drivers would like
that information too.

This is just based on my recollection from a friend of mine doing Postmates a
few years back.

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misun78
"Rides produced $742 million in EBITDA, up some 281%"

Time for the narrative of Uber burning VC money/subsidizing rides/selling-$2
bills-for-$1 to die?

~~~
busterarm
Maybe. Uber has more than doubled in price for me for just about any given
fare over the last year. I use it much less than I used to. I'd like to see
rides up as well as revenue from those rides.

~~~
majormajor
Uber costs 2 to 3 times as much for me as it did 4 years ago, so yeah, I think
that's changed.

But I've also been riding much less.

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agumonkey
Is it a flat rise or just new tricks like late night fees for "faster"
matching ?

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wpietri
Wait, Uber is now selling cuts in line? I hope the ghosts of their
kindergarten teachers haunt them as they sleep.

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agumonkey
Well that how I understood their "communication". They were so concerned about
me waiting in a crowded area at night that they gently offered to take 3-4x
times my money just to be sure a driver comes faster.

This levels of concerns warms my blood.

~~~
busterarm
As bad as that sounds, there are some nights where I'd just pay that. Two
years ago on July 4th I ended up stuck far from home and mass transit and had
to walk a few miles and still wait 90 minutes to get an Uber.

I would have paid $200 or more for that Uber if it was fast.

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Kiro
Look at all the all the completely erroneous forecasts dominating the top
comments in threads for previous results (often exaggerating the impending
doom). This is the first thread where people seem positive about
profitability, so maybe it's time to short.

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tmh79
Forecasting EBITDA profitability by Q4 2020

~~~
nappy-doo
EBITDA profitability isn't profitability. It's profitability on all but
accounting expenses, which are real expenses. It would be like saying, "I made
100k last year, before I paid my taxes, my mortgage, and my health insurance;
but, I still made 100k!!!!!"

EBITDA is a terrible accounting metric that people use to hide REAL costs to
doing business.

(Note there are reasons to use EBITDA, but in non-comparison environment [ie,
an environment where you're talking about absolute metrics], it makes no
sense.)

~~~
intuitionist
This is maybe a bad example because it is exactly how people talk about
compensation. I’ve never heard anybody say “oh I made $70k last year after
taxes and rent.”

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sdinsn
> I’ve never heard anybody say “oh I made $70k last year after taxes and
> rent.”

Really? That's pretty much how I and everyone I know talks about compensation.

~~~
function_seven
They subtract their _rent_? Really? Taxes I understand. Or even 401(k), or
benefits, or whatever else is between Gross and Net. But I've never heard
someone deducting certain categories they spent their income on.

Maybe this is a regional thing?

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throwawayb1z3
Uber/UberEats driver here with a few thousand rides. I'm retired from a
technical professional career in California. I don't want to give out more
info because I don't want to get deactivated. It's a fun job and I love
talking to people and being out having a look around.

Uber shot itself in the foot in two ways in regard to that big percentage
going towards driver incentives

A. Uber trained people not to tip so only 10% of them do.

B. Uber drivers do both ride share and Eats in the same app. They can turn off
one or the other or do both. There often aren't enough Eats drivers as a
result (more to follow)

A cont... ~~~~~~ People always used to tip taxi drivers, but Uber said "hey
you don't need to tip on Uber" and implied or outright said tips are included.
Often rides are not profitable without a tip, so drivers refuse them or cancel
them. For example, driving 10 miles to give someone a 2 mile ride. So Uber has
to gamify and pay incentives for consecutive rides or whatever (I ignore the
games, because I do Lyft as well. I make more doing both, rather than playing
the games)

Here's what Uber has said over the years about tipping:

March 30, 2014
[https://web.archive.org/web/20140330002844/https://www.uber....](https://web.archive.org/web/20140330002844/https://www.uber.com/)
From the rider landing page: CASHLESS & CONVENIENT You don't need cash when
you ride with Uber. Once you arrive at your destination, your fare is
automatically charged to your credit card on file – no need to tip. We’ll also
e-mail you a receipt.

From the help: Tipping Drivers Being Uber means there is no need to tip.

Mar 31, 2017
[https://web.archive.org/web/20170331040415/http://www.uber.c...](https://web.archive.org/web/20170331040415/http://www.uber.com/ride/how-
uber-works/) Do I need to tip? The Uber app cannot include a tip when billing
you for a trip fare... In most cities, Uber is a cashless experience. Tipping
is voluntary. Tips are not included in the fare, nor are they expected or
required. As a rider, you are not obligated to offer your driver a gratuity in
cash. If you decide you would like to tip, your driver is welcome to accept.

Today Can my driver ask for a tip? Drivers may request tips at their
discretion. Drivers care about rider ratings and do their best to create an
ideal trip experience. While Uber does not require riders to offer drivers a
tip, you are welcome to do so in cash, through the app, on riders.uber.com, or
from your emailed trip receipt. Please note that the trip fare charged to your
payment account does not include a gratuity.

B cont... ~~~~~~ By doing UberEats in the same app and subjecting Eats drivers
to the more stringent standards required of passenger carrying drivers (nice
car, spotless background check) they eliminate a lot of Eats drivers, who may
have an older car or minor traffic citation. Not only that, but why do Eats
when Uber rideshare is busy? (and Lyft is busy, since most drivers do both)
With Eats, you have to get out of the car, fight your way into a busy
restaurant (Fri,Sat night) deal with surly restaurant personnel. Then, drive
to some apartment complex, get out and look for the apartment in the maze, or
drive to a house on a dark street and look for the right house number, which
is barely visible in the dark or doesn't exist. Then try to find the front
door (some will come out and meet you, but not many) Then on top of that not
get a tip. You don't have to tip Uber, remember. Eats tip rate is a little
higher.

Conclusion: Because Uber had told people that they didn't have to tip and that
got into the zeitgeist, only 10% of them tip. Uber has to offer bigger driver
incentives as a result. Would less people use Uber if they felt they had to
tip? Yes, that's why Uber said people don't have to tip. At the time, there
were less drivers and I hear anecdotally from other drivers that the money was
better than now, even without the tips. Waiters, Bar tenders, many others make
good tip money, but that horse has left the barn for Uber and now they can't
retrain people to tip.

UberEats is a second class job for Uber/Lyft drivers. It would be better as
it's own app with less stringent rules. There would be more drivers and they
would get there faster.

If I am wrong about any of this, I welcome someone pointing that out. Thanks
for reading.

~~~
antirez
Isn't it simpler to just stop this tip culture and adjust the prices so that
drivers can have an acceptable margin by default?

~~~
ghaff
Simpler for who? It's price discrimination. If you're price sensitive, tip not
included means you get a lower price. If you're not price sensitive (e.g. on
an expense account) you can throw in a tip.

~~~
antirez
What you mean? The rest of the world runs without tips. What is discriminative
is to leave the margins up to random customers picks. Instead there should be
Uber prices for the driver that are fair, and no tip should be asked, so every
driver knows beforehand what they are going to earn and if it is too low there
will be very little incentive to apply as a driver. And Uber instead of
correcting the fact people don't tip will just set a different price per km or
whatever.

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newfeatureok
I wonder how Uber would do if the 2008 financial crisis were to repeat in say,
2022. Tech companies in particular are in for a surprise if a recession of
that magnitude happens again.

~~~
three_seagrass
Uber would do well because there would be a flood of people with more free
time and looking to make quick cash with their cars.

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benburleson
Is that good for them? Is there currently a shortage of drivers?

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nemothekid
>Is there currently a shortage of drivers?

Most of the money Uber is burning is to recruit drivers. If there are more
drivers around, there's less of a reason to burn $100MMs to recruit drivers.

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smoyer
Still bearish on Uber stock

~~~
fusdgsaf
Same. I think about the profits up until judgement day - right now I do not
see it, and anybody saying "self-driving" will make it profitable will
realize, self-driving will shift the entire paradigm and that's too much
uncertainty for me. I'm not comfortable saying "if X leads to Y, leads to
Z"the stock wins.

