
Uber Posts $708M Loss as Finance Head Leaves - praneshp
https://www.wsj.com/articles/uber-posts-708-million-loss-as-finance-head-leaves-1496272500
======
bpodgursky
$708 million loss, narrowed from $991 million last quarter

18% growth from last quarter (note: that's not Y/Y. this is ridiculously fast,
given the huge base.)

708mm loss / 3.4 billion in revenue is only about 20% under even. And what
most people miss, is that the 3.4 billion is the 30% cut Uber takes from a
ride. Prices don't have to rise 20% to break even, prices have to rise 6%
(assuming no efficiency improvements via pool etc, which is frankly
ridiculous)

Yeah... Uber is doing fine.

~~~
lettergram
> Uber is doing fine.

Yes and no, they are in a space which is extremely price competitive. I
literally am watching Uber take a dramatic hit in my area right now. Lyft came
to town and probably 80% of the drivers solely use them now, driving up the
Uber prices.

Now, I only use Lyft - as do most of the people. Plus, most of the Uber
drivers are shady here and the people think Ubers a snaky company.

I realize this is ancidotal, but everywhere I go (I travel a lot, switching
between Uber and lyft), Lyft seems to be more popular among drivers and
riders. They simply don't use it because of price/market share. However,
adjust the price or driver's and the equation changes.

I honestly still don't see them making it out of their situation.

~~~
skinnymuch
I'm not buying that most people use Lyft in your area - passengers or drivers.
I believe you think that and your circle of people may also be doing the same,
but beyond that, I'm guessing there's a lot of bias. Especially if you're
saying everywhere you go Lyft seems to be more popular among riders. It's just
not true at all.

For my own anecdote, I'd bet 75% of my FB friends with smartphones within my
age range, 21-40, have Uber on their phone or have only ridden Uber. And a
fraction of them will have Lyft. Among people I actually know, this is roughly
the case, with Lyft being a bit more popular, but that's because of who I
am/surround myself with.

~~~
lelandbatey
As long as we're sharing anecdotes, most of the people I know, parents and
young kids included, have made the switch to Lyft starting about 8 months ago.
They seem to be the less evil company, so people enjoy working for and using
them.

~~~
rtx
Most of my family and friends exclusively use Uber because of Travis and his
values.

~~~
amaks
What values?

~~~
rtx
Libertarian

~~~
AlexandrB
So money, gotcha.

------
habosa
A couple things to note:

1\. This is new loss excluding 'employee stock compensation and other items'.
Anecdotally I've heard that Uber offers, particularly for advanced technical
positions, are extremely stock heavy. This could be a big exclusion. It's also
a bit of a double standard since so much was made of Snap's recent losses
which were largely stock based compensation driven.

2\. Past discussions on HN have noted that Uber counts the full Pool fare as
revenue but this is not the case for Uber X or Uber Black. So if Pool is a
rising share of rides (I've heard it is) then Uber will show strong revenue
growth without a proportional growth in net income.

And a question: How long will Uber's investors tolerate the current situation?
The company is losing money at a record setting pace, has a new scandal every
day, and has seemingly no plans for a liquidity event. Even though the on-
paper growth is fantastic people must want to get their money out. If this was
a public company there would be a huge sell off.

------
bo1024
If I understood the Reuters article correctly, Uber made $3.4 billion and
therefore lost $4.1 billion in the first quarter of 2017.

Can someone help me understand what Uber spends $4.1 billion dollars on in 3
months? Is it because they're subsidizing rides by that much on average? (i.e.
paying drivers more than riders pay)

~~~
BurningFrog
They're paying drivers 70% of the fare, so no.

It's a very good question. They must burn a lot of money on developing self
driving cars and other research. But can it really be this much?

~~~
imjk
Advertising and expanding around the globe would be a good place to start.
It's not cheap to find/put top-notch staff on the other side of the world to
expand a business, open offices, recruit drivers and customers, etc.

------
abhv
They haven't broken out the losses.

(a) Are they profitable in the US? That would be a huge milestone.

(b) If not entire US, are they profitable in top-X US urban markets, and thus
losses are all due to expansion into 2nd/3rd quartile of cities?

(c) Maybe some metrics like "After subtracting R&D efforts in self-driving
cars, and legal fees due to multiple lawsuits, we are on average making X
cents for every mile/minute driven."

"Our drivers take X days to enroll, and then work for us Y hours per week, and
the turnover rate is Z."

~~~
askafriend
From internal sources, I can say with some confidence that they are profitable
in most major US cities.

(I do not work for Uber, so take this for what it's worth)

~~~
dx034
Is that under the old accounting system (which paid out too little to drivers)
or the correct one?

------
conjecTech
Last quarter people drew attention to the different accounting methods used
for pool versus other uber services, with pool booking the entire price of the
ride as revenue rather than just uber's take. Does anyone have a sense of how
much of the increase in revenue is due to increased ridership versus a shift
in demand towards pool? Do flat fares use the same methodology?

------
randomdrake
Great example of how the headlines can drive a story more than the story
itself.

While Uber may have posted $708 million of losses, it is also up 18% in
revenue from last quarter. That's 3.4 _billion_ dollars in the first quarter
of 2017.

 _Uber is making approximately $1,500,000 per hour._

I dislike Uber as much as the next person for ethical reasons, but a company
that can achieve millions of dollars in revenue per day, _in 7 years_ , is
quite extraordinary.

~~~
ProfessorLayton
$1,500,000 per hour in revenue sounds great.

Spending $1,872,000 per hour to bring in $1,500,000 per hour sounds less
great.

I understand that it takes money to make money, but this is one of the most
extreme cases in a business.

~~~
dmix
People were saying the same thing about Twitter forever and turned out to be
largely wrong. I have a feeling the company making billions of dollars in
revenue has some smart people who figured out how not to mess this up.

But who knows maybe Uber will stop being the dominate taxi / self-driving car
company globally over the next decade and mess it all up. Or not... but I
doubt this large expenditure was done without foresight. The question is
whether they can dominate for years to come in a high-growth industry, which
it seems likely given the wide gap between them and the competition.

~~~
mrep
> People were saying the same thing about Twitter forever and turned out to be
> largely wrong.

Twitter lost 456 million dollars in 2016 [1] and I don't remember them ever
being profitable so i don't know how those people are wrong.

[1]:
[https://en.wikipedia.org/wiki/Twitter](https://en.wikipedia.org/wiki/Twitter)

~~~
pfarnsworth
If you look, their losses are because of stock-based comp, not because of
spending. It's generally a GAAP loss, not a cash loss.

~~~
dx034
It still means that their owners won't see any of the money generated by the
company. Before compensation, most companies are profitable. And in the end it
doesn't matter to the shareholder if you pay stock compensation or cash.

~~~
beavisthegenius
Not true. Stock compensation is dilutitive to existing shareholders putting
future pressure on earnings per share and generally means you'll see a share
buyback further reducing cash on balance sheet or increasing debt. Further,
large blocks of lockup expirations cause selling pressure. Once talent sells
stock compensation how do you then retain them? Do you grant more shares
diluting existing shareholders further?

~~~
dx034
It is different for incentives but not for the actual outcome. Obviously you'd
have to compare the same compensation levels, i.e. 100k in cash vs 100k in
stocks (at payout).

For start ups it can turn out cheaper as the compensation will be lower in
stocks if the company doesn't perform well. From a shareholder perspective
it's compensation and shouldn't be treated differently. Excluding it from
costs is dangerous as it gives the impression that it's optional costs when in
reality, you need to pay the stock compensation to retain talent.

------
nullnilvoid
Revenue: $3.4B Loss: $708M Growth: 18% Quarter over quarter Cash to burn:
$7.2B

With the current burn rate, Uber can burn another 10 quarters.

~~~
IAmGraydon
That would be at 0% growth, which is unlikely.

~~~
dx034
If much of the growth comes from Pool (where gross fares count as revenues,
not their cut), growing revenue could actually increase losses.

------
patrickbolle
Uber is great, but I've relocated to Bali and the competitors here are doing
such a fantastic job at giving me reasons not to use Uber.

Go-jek is cheaper, you can pay with cash, and they offer like 15 other
services like... go-food, go-massage, go-cleaning, etc.

It's incredible.

------
SomeStupidPoint
So Uber made 612M more in revenue and lost 283M less money, in 17Q1 than 16Q4.

Naively, that seems like a good sign (for Uber), but it could also just be
that they stopped growth spending or are hiding losses in unreported figures.

Does anyone have more insight in to what could have caused it?

~~~
beager
Tangentially related: is there a seasonal ebb and flow to Uber usage that
could soften or sharpen this delta? I know I'm much less likely to want to
walk 3 miles in February than October, but that's just one person in one city.

------
ProfessorLayton
I wonder how they'll be able to raise more cash with all this turmoil within
the company. Even a 15B [1] cash hoard can't last much longer at this burn
rate.

[1][https://mobile.nytimes.com/2016/06/21/business/dealbook/why-...](https://mobile.nytimes.com/2016/06/21/business/dealbook/why-
uber-keeps-raising-billions.html)

~~~
rtx
People are standing in line.

~~~
dx034
People who are willing to take a substantial share at a $70bn valuation? I'm
not so sure about that. An IPO could be their only chance to raise significant
amounts of capital. They'll need to use the time they have with their current
cash balance (~2 years) to look good enough for an IPO.

------
code4tee
They do not have a sustainable business. They're clearly pumping up revenue
with subsidies (which is why they lose so much money). I do use Uber
occasionally but when I do there's so many offers and deals that I never pay
anything close to a break-even price. If you sell dollar bills for 85 cents
it's easy to have lots of revenue.

------
noway421
They are surely gonna run out of top c-level execs faster than out of cash.

------
nocoder
I like how the WSJ headline tries to imply casualty between loss and leaving
of finance head. Why cannot these guys simply share the news instead of trying
to imply the cause.

~~~
matt4077
"as, conjunction: used to indicate that something happens during the time when
something else is taking place: Frank watched him as he ambled through the
crowd | as she grew older, she kept more to herself."

So they're just trying to mention both big news items in the same headline.
The casualty[sic] is all in your head.

~~~
nocoder
Maybe, but "as" also can be used in place of "because or since". Here is
another headline from Reuters "Uber's finance head leaves; company's quarterly
loss narrows". In my opinion, both the headlines provide a different slant to
the same story.

P.S:- We both misspelled "causality", what a "casualty" :)

~~~
matt4077
That use of "as" would require a comma: "they were free, as the case had not
been proved."

P.S.: I noticed the misspelling of causality, which is was the [sic] was
trying to indicate.

------
kcorbitt
Has anybody published an estimate of what Uber's cash reserves might look
like, or how long they can remain solvent at these insane burn levels? Losses
of $3B/year seem like they would put almost anybody out of business.

~~~
SubFuze
From the article: "The company, which has raised some $15 billion in equity
and debt funding, said it still has $7.2 billion of cash left on hand, about
the same as it had at the end of last year."

------
dingo_bat
I know most people hate on uber, but it has impacted my life a lot. I think
the model they've demonstrated is a legit model, and the ruthlessness with
which they pursue it should not take anything away from the company's value.
In fact, it should add. I want companies to show a giant middle finger to
monopolistic city laws that harm citizens.

~~~
Bakary
>I want companies to show a giant middle finger to monopolistic city laws that
harm citizens.

Just wait until a private company holds a monopoly on an essential service,
especially one with a history of unethical conduct like Uber. The city laws
will seem like the good old days in comparison.

~~~
dingo_bat
Why would uber have a monopoly? There are numerous competitors already.

~~~
Bakary
You don't have to be an outright monopoly in the literal sense to cause
damage. An overwhelmingly dominant position like the one Microsoft had in the
past is enough.

------
pokoleo
[http://www.paulgraham.com/submarine.html](http://www.paulgraham.com/submarine.html)

------
downandout
Paywall bypass: [https://www.wsj.com/articles/uber-posts-708-million-loss-
as-...](https://www.wsj.com/articles/uber-posts-708-million-loss-as-finance-
head-leaves-1496272500)

------
bitmapbrother
You could say they lost an Otto.

~~~
mbose
Hahaa

------
rattray
Reuters (non-paywall): [https://www.reuters.com/article/us-uber-results-
idUSKBN18R3E...](https://www.reuters.com/article/us-uber-results-
idUSKBN18R3EQ)

~~~
zeusk
wsj Article Unlock bookmark:
javascript:window.location.href='http(s)://m.facebook.com/l.php?u='+encodeURIComponent(window.location.href);

remove the '(' and ')' around s in https

~~~
noway421
This is incredible. Context: wsj allows clicks from facebook to view the
content without paid subscription.

------
korzun
> Yes and no, they are in a space which is extremely price competitive. I
> literally am watching Uber take a dramatic hit in my area right now.

You are 'literally' watching Uber take a 'dramatic' hit. Okay.

Extremely price competitive market, yet you only mention Lyft.

> Lyft came to town and probably 80% of the drivers solely use them now,
> driving up the Uber prices.

Where did you get your numbers from? Just making stuff up as you go?

> Now, I only use Lyft - as do most of the people.

I only use Uber - as do most of the people. See how this generic mud-slinging
like commentary works?

> Plus, most of the Uber drivers are shady here

Making blanket statements with words like 'shady' and 'here' is cheap.

You did not mention a single, verifiable fact. I can apply this kind of
narrative to pretty much anything.

> I honestly still don't see them making it out of their situation.

Wrap it up with a cliche 'honesty...'. I do not understand comments like this;
how much is Lyft paying you?

~~~
dang
Commenting this uncivilly will get your account banned on HN, so please don't
do that, and please in particular don't accuse other users of astroturfing
just because you happen to hold a different view than they do. It's a popular
internet trope but it isn't allowed here.

We detached this comment from
[https://news.ycombinator.com/item?id=14456973](https://news.ycombinator.com/item?id=14456973)
and marked it off-topic.

~~~
goodladjohnny
That said, harsh — maybe, but @korzun still has a point.

Original comment is (clearly) biased and doesn't align with the actual facts.
I wonder why it got upvoted in the first place.

I don't think the accusation has been made because "one happens to hold a
different view". It is harsh, but to be fair, OP failed to make a valid point.

------
johan_larson
Could we stop posting links to paywalled content, for crying out loud? Or at
least require that it be marked? Most news is available somewhere without a
subscription.

~~~
bla2
1\. Click "web" link below story here on HN 2\. Click first result on Google

WSJ doesn't paywall if the referrer is Google.

~~~
ewoodrich
FWIW, I still hit the paywall after clicking on the Google search result.

~~~
johan_larson
Yes, I don't think that trick has worked for some time.

~~~
tomhoward
Google doesn't seem to work anymore but Facebook does; I was able to find it
and read the whole article by searching for the title in Facebook.

------
georgeecollins
So for $70b I can buy a wallet that pays me -2.8b per year? Not to be
negative, but it sounds like it is time for a down round.

------
untilHellbanned
"Revenue up 18% Loss down 1/3rd 22x+ the revenue of $snap

So much important work left to do, but congrats to the @Uber team."

[https://twitter.com/jason/status/870059383765389312](https://twitter.com/jason/status/870059383765389312)

~~~
guelo
Why the silly dig at Snap? If you subtract Snap's employee stock program it
lost $200m last quarter which is a lot less than Uber's $700m loss.

~~~
arthurcolle
Uber might actually exist in 10 years, the dig at Snap seems extremely fair
game in this frothy environment

~~~
guelo
At their respective current burn rates they both probably have 3-4 years left.

