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Uber Q2 financials

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Re: Uber Q2 financials

#31

Post by WisNorCan »

malandrew wrote: post #28
WisNorCan wrote: post #2

“Uber had $6.6 billion in cash at quarter's end, down from around $7.2 billion at the end of Q1 ... Uber's global ride-share business was margin positive last quarter, which is a flip from Q1.” Uber is on a loss run rate of $2.4 billion annually mainly from the US market. The questions become: * Given that global is positive, what is the loss in US? What will it take to flip US to positive? What will Lyft do? * Can U…

You can't just extrapolate out to 2.4B. Just one quarter ago, that same extrapolation would have been more than 2.8B. They are improving their efficiency while increasing their revenues. I wouldn't be surprised if that loss run rate is $2.0B flat by end of Q4 while gross revenues continue to rise. Lyft on the other hand has losses almost twice as high as Uber's relative to gross bookings. People accuse Uber of buying…

Sure you can. It is not obvious what the right methodology would be:

* Should you assume that losses are going to get worse? Lyft raised their largest round so far: $600M at $7.5 Billion. Presumably, they are going to use that money to get even more aggressive. I hear that some US markets are already a mess for Uber. Others are good.

* Should you assume it is going to get better? In the past quarter it has, so you might want to assume that it will continue. Also, I don't know if I trust Uber's financial reporting. This is clearly a PR move and you have a lot of choices in private accounting.

Assuming steady state does not strike me as an unreasonable way of forecasting.

Re: Uber Q2 financials

#32

Post by malandrew »

WisNorCan wrote: post #31
malandrew wrote: post #28

Earlier quoted context omitted.

You can't just extrapolate out to 2.4B. Just one quarter ago, that same extrapolation would have been more than 2.8B. They are improving their efficiency while increasing their revenues. I wouldn't be surprised if that loss run rate is $2.0B flat by end of Q4 while gross revenues continue to rise. Lyft on the other hand has losses almost twice as high as Uber's relative to gross bookings. People accuse Uber of buying…

Sure you can. It is not obvious what the right methodology would be: * Should you assume that losses are going to get worse? Lyft raised their largest round so far: $600M at $7.5 Billion. Presumably, they are going to use that money to get even more aggressive. I hear that some US markets are already a mess for Uber. Others are good. * Should you assume it is going to get better? In the past quarter it has, so you mi…

Losses may or may not get worse. AFAIK, they have gotten better every quarter since China was sold off. Assuming steady state or steady state of change are both reasonable ways of forecasting. A strong trend line spanning several quarters better supports the latter in this case.

For what's its worth, I recently saw losses as a percent of gross bookings posted elsewhere: Lyft at 13% vs Uber at 8.5%. Are you assuming that Lyft will increase subsidies after this new round of funding? If so, that will only worsen its losses as a percent of gross bookings. Furthermore, that isn't Lyft's biggest round. They raised $1B in January 2016.

Uber just needs to remain more efficient than its competition in all markets, which is easier to do with global operations and multiple business lines that are easy to scale out.

Re: Uber Q2 financials

#33

Post by sfifs »

cloudwalking wrote: post #8
bousaid wrote: post #6

Earlier quoted context omitted.

That's my biggest wonder, how can the economics change for the better?

If, for example, Uber crushes all competition, then they can raise fares and lower partner payments and make a bigger profit.

This "raise prices after crushing competition" piece is something that practically never happens unless you manipulate governments to institute rules that preserve Monopoly. Even then as SpaceX & Uber showed, rent seeking gets punished by market.

If they raise prices significantly, someone else will come at a lower price with lower service quality (as already happens in Asia) and take a share of more price sensitive segment of the market.

Re: Uber Q2 financials

#34

Post by valuearb »

bousaid wrote: post #6
WisNorCan wrote: post #5

Earlier quoted context omitted.

Growth companies are valued on future expectations and not on current financials. You have to believe that the economics will improve for Uber. The $68 billion Uber valuation is also not real in the sense that investors have liquidation preferences and multiples. Employees don't and have the inverse of what is given to investors. The real value is some fraction. They have also stumbled like no other company before th…

That's my biggest wonder, how can the economics change for the better?

It improves every quarter for them. Every time they open a new market they have to spend hundreds of dollars per driver in recruitment incentives. Once they build out the market, they start making positive margin. If you try to grow internationally as fast as possible, that means tons of money on driver recruitment and building market infrastructure before the revenues come in.

If Uber wanted to be profitable they could stop expanding into new markets, kill Kalanick's Krazy side businesses, and would likely be profitable the next quarter.

Re: Uber Q2 financials

#35

Post by greenyoda »

koolba wrote: post #13
bousaid wrote: post #6

Earlier quoted context omitted.

That's my biggest wonder, how can the economics change for the better?

Say they have a break through in self driving cars and cut the fee they're paying to drivers down to just the depreciation of the vehicle. They'd be profitable immediately.

Even if they make a breakthrough in self-driving cars tomorrow, it could still be many years before laws are updated to enable them to legally operate self-driving cars (without drivers present) in all the different states and countries that they do business in. Insurance companies would also need to be willing to insure these cars before they'll be legal to drive.

To operate self-driving cars, they'd need to buy or finance the vehicles, which is a huge expenditure. They'd also need to hire people to clean and maintain them, since drivers wouldn't be doing that anymore. They'd have to bear the cost of fuel (whether gas or electricity) and insurance, which drivers currently pay for. Once they pay for all that, would it cost more or less than paying a driver who provides their own car? I certainly don't know.

Also, even if all the factors noted above balance in favor of self-driving cars in the long term, it may be a while before self-driving cars come down enough in price to compete with human drivers in conventional vehicles - it takes significant engineering work to evolve a design from a prototype to mass production.

The question is whether Uber can stay in business long enough to reap the benefits of self-driving cars. I don't think the answer is obvious.

Re: Uber Q2 financials

#36

Post by valuearb »

debacle wrote: post #15
cloudwalking wrote: post #8

Earlier quoted context omitted.

If, for example, Uber crushes all competition, then they can raise fares and lower partner payments and make a bigger profit.

Every time Uber scores a municipal victory, they're lowering the barrier to entry for competitors.

And increases the size of their moat.

Re: Uber Q2 financials

#37

Post by candiodari »

tmh79 wrote: post #22
debacle wrote: post #15

Earlier quoted context omitted.

Every time Uber scores a municipal victory, they're lowering the barrier to entry for competitors.

not necessarily true. Uber is developing relationships with the regulators in all of their markets, a highly local endeavor. It's possible, even likely, that they are going to use these relationships to their own advantage when launching self driving cars in different markets.

And why would governments, that haven't allowed even private railroads in the past century, allow that to happen ?

If you put it like that, no government will stand for that. They can even look good on jobs while destroying uber.

Re: Uber Q2 financials

#38

Post by nopatternhere »

forthefuture wrote: post #3

Can someone explain to a layman how a company losing $600M every 3 months, with $6B remaining of $12B raised (50% loss over 8 years) is "worth" $62B?

I'll have a stab. Value = what someone will pay. what someone will pay is X% less than what it will be worth in Y-Z years (where X is usually 50% and Y and Z are between 5 and 10).

So, what will Uber be worth?

The hyper-growth startup model is double revenue yearly, while adding 50% to costs. Lets do the maths using simplified numbers: Uber makes $7 billion per year, and loses $3B, for total costs of $10B.

Year1: Revenue = $7B * 2 = $14B. Costs = $10B * 1.5 = $15B. Loss = $1B

Year2: Revenue = $145B * 2 = $28B. Costs - $15B * 1.5 = $22.5B. Profit = $5.5B

So, if you assume a P/E ratio of 25, Uber would be worth $137.5 in 2 years. Would I pay $62B (if I had it) for a company worth $137B in two years? Imma go ahead and say yes!

Now, 100% growth on 50% cost increase may not hold, but as long as revenue growth > cost growth, Uber will inevitably be profitable. The question is by when, and profitable to what $ value, and at what multiplier? double revenue, 175% costs, and a 35 multiplier, and Uber is worth $200B in 4 years.

Re: Uber Q2 financials

#39

Post by nopatternhere »

josephmerz wrote: post #21
tmh79 wrote: post #12

Earlier quoted context omitted.

> I think uber's in a death spin, not sure it can pull out. that is not evidenced at all in their financials though. Their losses are down and their revenue is up. They are doing exactly what is expected of them if they hope to be profitable in the next 18 months or so.

Really can't see them profitable in 18 months. At least Musk's focus is on product for all parties. Uber only cares about scaling

If Yearly Revenue = Yearly Revenue X 2, and Yearly Costs = Yearly Costs X 1.5, Uber is profitable within 2 years.

Re: Uber Q2 financials

#40

Post by collyw »

gremlinsinc wrote: post #7
dragonwriter wrote: post #4

Earlier quoted context omitted.

Value is based on what investors expect the firm will be able to do in the future, which may differ from what they are doing now.

I think there will be a big pivot from car ownership to rentals... maybe add up insurance, maintenance, and leasing fees to get to $600-1000 a month for unlimited car-service. Automated cars will be summoned by phone, arrive when you schedule them, and go pick up others when not needed.. Pretty sure a lot of the car companies are planning something like this, I know tesla is. Uber wants to hold out till their self-dr…

Maintenance is likely to be a lot higher. You are in a car without a driver. What is to stop you spilling crap all over the seats and not cleaning up? A good deal of Taxi use comes through people drinking and not being allowed to drive.There are other benefits to having someone physically drive the car.

(I think this applies even more to Amazon's automated deliveries via robot / drone - whats to stop the stuff getting stolen?)

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