From Hubert via e-mail:
Uber released 2Q P&L results Wednesday.
1. GAAP Net Loss for the quarter was $891 million. This was significantly worse than its 1Q $551 million loss.
Bloomberg’s press report, Uber CEO Embraces Losing Money With Revenue Growth Slowing, had a bit better balance.
2. Unlike 1Q, reported 2Q results did not appear distorted by any major accounting games. In 1Q Uber sold failing Asian operations to Grab, and asserted the Grab shares it obtained in the transaction were worth $3.0 billion, producing a 1Q accounting profit of $2.5 billion. Many (but not all) of the media reports of Uber’s 1Q results fell for the “Uber is now profitable” gambit. Press coverage generally emphasized the “2Q losses increasing” point, reversing whatever short-term PR benefits Uber might have gotten from its claims of 1Q “profit”.
3. Uber’s GAAP net loss for the year ending June 2018 was $4.00 billion. Its net loss for the year ending December 2017 was $4.46 billion. So losses are shrinking very slowly; at this rate they might achieve breakeven in their 15th year of operations. This dramatically contradicts the Morningstar claims (discussed in Part 16 of our series last Monday) that Uber would achieve a 45 point margin improvement in 2018 versus 2017, and achieve breakeven in 2020.
4. Uber supporters tend to emphasize revenue growth, while ignoring the profit problems. But Uber Net Revenue for the year ending June 2018 had increased 28% over Net revenue for the year ending December 2017. But Morningstar had predicted 2018 net revenue would be 60% higher than 2017. Without this type of rapid revenue growth, their entire case for a $100+ billion IPO valuation totally collapses. Other recent pro-Uber press reports have claimed extremely strong growth for Uber’s food delivery service. None of these claims have been substantiated, but they raise concerns that growth in Uber’s core car service business may be even less than 28%
5. A (paywalled) Tuesday piece in the tech site The Information — usually a reliable source of pro-Uber spin — reported that Uber was losing $125-200 million a quarter ($500-800 million annualized) on its driverless car efforts.
This would confirm the argument laid out in Monday’s Part 16 of our series on Uber’s economics that there is a fundamental contradiction between actions Uber might take to stem short term losses, and Uber’s need to promulgate an IPO narrative highlighting years of robust, profitable growth. Morningstar’s $100+ billion valuation estimate was based on ignoring the huge costs of developing these highly speculative future businesses. Even normally pro-Uber media outlets are beginning to recognize that they can’t continue to ignore $500-800 in annualized expense.