back to article What's a billion dollars between friends? Uber tosses match on mound of cash in first results since going public

Minicab disruptor Uber burned a billion dollars in the quarter ended 31 March 2019, its first since going public. Revenue rose 20 per cent to $3.1bn on a year ago, but Uber shouldered a loss from operations of $1.034bn compared to $478m last year. The company, however, claimed 93 million "monthly active platform consumers" ( …

  1. Pascal Monett Silver badge

    So, double the losses of last year ?

    Well that's starting on a good foot. Ain't it a bummer to not be able to comb over those pesky financial details and just bang on about how you're spending money you don't have on acquiring things in other countries ?

    You're in the army stock market now, you're Wall Street's bitch. If you're not sweating yet, you will be.

    You will be.

    1. Dr Who

      Re: So, double the losses of last year ?

      I think the sweatiness is largely in the investors' bum cracks.

  2. Warm Braw Silver badge

    Revenue rose 20 per cent

    And losses more than doubled?

    Part of me wants their revenue to rise more quickly...

    1. Loyal Commenter Silver badge

      Re: Revenue rose 20 per cent

      And all this without paying a whole slew of taxes, becuase they're "not" an employer...

    2. LDS Silver badge

      Re: Revenue rose 20 per cent

      Evidently, if each ride is subsidized, the more rides, the more money lost - plus all other expenses.

      But there will be Gartner/Wall Street analysts cheering because Uber "claimed 93 million monthly active platform consumers (customers), up from 70 million".

      1. fidodogbreath Silver badge

        Re: Revenue rose 20 per cent

        Evidently, if each ride is subsidized, the more rides, the more money lost

        They'll make it up in volume.

    3. I ain't Spartacus Gold badge

      Re: Revenue rose 20 per cent

      Yup. So they spent an extra $500m in order to increase turnover by $600m. Well it's a strategy I suppose.

      What was it General Pyrrhus said, "one more victory like that and we'll be ruined."

      1. BebopWeBop Silver badge
        Meh

        Re: Revenue rose 20 per cent

        Upvoted and I think he was reported (closish to the time) by a historian as Another such victory and I come back to Epirus alone

      2. John Brown (no body) Silver badge

        Re: Revenue rose 20 per cent

        I could almost understand a small startup with plenty of cash running at a loss initially to build brand, iron out any issues in the business model etc. But after the years Uber has been running and their expansions into other countries and other markets, I really don't see how various jurisdictions are not clamping down on them as predators. They and their ilk are using their financial clout to try to stamp out the competition.

        1. Anonymous Coward
          Anonymous Coward

          Re: Revenue rose 20 per cent

          They and their ilk are using their financial clout to try to stamp out the competition.

          That's by now almost a cliché of the US business model. Find something that works in volume, get someone to cough up a lot of money and grow quickly before the law catches up. By that time, you can just starve the competitors and buy the law, the politicians or the required lawyers to get away with the consequences of bending/breaking the law.

          It worked for almost any large US company, so they're just following the playbook. There are practically no consequences for any illegal aspects. That's also the gambit for investment - if they win, they win big. If not, they'll just deduct it from taxes and start again.

  3. Steve Davies 3 Silver badge

    This:-

    CEO Dara Khosrowshahi said: "We are now focused on executing our strategy to become a one-stop shop for local transportation and commerce

    That means they will continue to lose money hand over fist until every other form of transportation including ALL public transport and ALL delivery and trucking companies have been driven to the wall. Then they will quadruple prices. Then Profit. All done with zero proper employees.

    Is this what we want for the future?

    Oh wait... That million robotaxis that Elon Musk has promised to hit the roads next year and make a cool $100K for each owned (yeah right) will get in the way of Uber. Quick short Tesla Now! Drive them out of business.

    Yes, I'm a cynical grumpy old man.

    1. LDS Silver badge

      "Is this what we want for the future?"

      No, but it's what they want. They dream about a new Gilded Age based on monopolies. They understood governments are particularly weak today, and it's easy to manipulate politicians who dream the wealth of the richest ones, and are ready to sell their services to achieve some.

    2. Hans Neeson-Bumpsadese Silver badge

      Re: This:-

      I was listening to BBC World Service last night and heard someone talking about Uber - they summarised the strategy as "throwing a ton of cash at every possible venture in the hope that one of them will make money" (I believe I'm quoting more-or-less verbatim here)

      If that's all it takes, then each and every one of us reading this has the potential to be a Silicon Valley CxO.

      1. I ain't Spartacus Gold badge

        Re: This:-

        I think you missed the most important part of that strategy.

        It's throwing a tonne of someone else's cash at every possible opportunity.

        A nice phrase though, I like it and think I'll steal it.

    3. codejunky Silver badge

      Re: This:-

      @Steve Davies 3

      "That means they will continue to lose money hand over fist until every other form of transportation including ALL public transport and ALL delivery and trucking companies have been driven to the wall. Then they will quadruple prices. Then Profit. All done with zero proper employees.

      Is this what we want for the future?"

      Yes. Think about it. Uber pays for us to get from A to B (their losses). Then when the black cab monopoly, the taxi licenses in New York etc are all sunk Uber ramps up its prices and without the government protections of black cabs and taxi licenses etc they get undercut by new entrants who see the profit.

      So yes improved taxi service + them paying for our rides + existing monopolies being damaged and lost making it easy to remove monopoly power.

      1. Steve Davies 3 Silver badge

        Re: This:-

        and screwing those who sort of work for them into the ground in the process.

        I have no objection to ride sharing but the way they screw their drivers IMHO is as bad as the worst of the really bad company bosses ofthe Industrial Revolution.

        The more enlightened of them realised that looking after the workforce meant more profit. Exactly the opposite to Uber but the drivers are not employees are they? yeah right.

        1. codejunky Silver badge

          Re: This:-

          @Steve Davies 3

          "and screwing those who sort of work for them into the ground in the process."

          Eh? People go to work to earn more, this is proven very well by our welfare system which can be hard to get out of due to work not paying enough. So if it costs more to work for Uber than they make it isnt worth doing and they stop doing it or dont even bother in the first place. If that is the case Uber would be out of business or raising compensation quickly.

          1. Justthefacts

            Re: This:-

            Because Uber payments are very non transparent, and their workers are often both ill-educated and desperate.

            Pay net of expenses is usually below statutory minimum wage. Uber business is just an elaborate legal dodge. People may be prepared to work below minimum wage when desperate, and the law is there to stop employers taking advantage.

            Secondly, in many places analysis shows that being an Uber driver is equivalent to a pay-day loan on your car. It’s badly paid for your time, but roughly net zero when petrol and car maintenance is imcluded.People who are sufficiently desperate and maybe not too good at sums, will trade off money in their pocket today to buy food, as a loan against the normal repair bills in six months time.

            Similar pay day loans companies still exist and make money, but it’s pretty skanky to con people like that.

      2. JohnFen Silver badge

        Re: This:-

        "making it easy to remove monopoly power."

        Is that really a win, though, when it is just being replaced by a new monopolist, Uber? Particularly since Uber has been a corrupt, criminal company from the outset.

        1. codejunky Silver badge

          Re: This:-

          @JohnFen

          "Is that really a win, though, when it is just being replaced by a new monopolist, Uber? Particularly since Uber has been a corrupt, criminal company from the outset."

          Yes it is a win. The biggest opposition to Uber seems to be from the monopolies that already exist. People are not opposing monopolies nor opposing big business by opposing Uber.

          1. JohnFen Silver badge

            Re: This:-

            I'm honestly not seeing the win here.

            1. codejunky Silver badge

              Re: This:-

              @JohnFen

              Ok, why? We have monopolies which are being contested by Uber. Already the technology to book using apps etc have changed things as the older 'established' monopolies got stale. Innovation, reduced fares and greater availability now exists because of this challenge.

              Markets and competition improve things greatly. I am not discounting your feeling that you cant see a win there but I would like to know why.

      3. Anonymous Coward
        Anonymous Coward

        Re: This:-

        @codejunky, you're wasting your breath, mate. People can't see the end of their own noses for their lack of understanding of markets, especially with this lot.

        1. Anonymous Coward
          Anonymous Coward

          Re: This:-

          Do you mean "markets as in economics textbooks" or "corrupted, unfair markets as exist in reality"?

          If Uber becomes a monopoly the first thing they will do is encourage politicians to raise the bars for entry for taxi firms.

          1. codejunky Silver badge

            Re: This:-

            @Voyna i Mor

            "If Uber becomes a monopoly the first thing they will do is encourage politicians to raise the bars for entry for taxi firms."

            The current monopolies already have this and do this. Uber is currently breaking down those barriers or at least giving politicians very good reason to do the right thing and stop corrupting the markets. And yes Uber probably will want to raise the bar for entry, while right now we already have such bars by the current monopolies.

          2. Anonymous Coward
            Anonymous Coward

            Re: This:-

            Do you mean "markets as in economics textbooks" or "corrupted, unfair markets as exist in reality"?

            Name a corrupted, unfair market and I'll show you a market dominated by government regulation. Every monopoly on earth (save one: DeBeers) in the history of humankind has been created by government.

            But the wankers here and elsewhere blame free markets and capitalism for all of societies ills, which is the most strawman of strawman arguments.

    4. Doctor Syntax Silver badge

      Re: This:-

      "That means they will continue to lose money hand over fist until every other form of transportation including ALL public transport and ALL delivery and trucking companies have been driven to the wall."

      That assumes they can get hold of enough money. If not it's they who go to the wall.

      1. Doctor Syntax Silver badge

        Re: This:-

        I read today that a French company is now undercutting Uber in London. That's another risk to the "drive out the competition" strategy. Assuming you succeed before you've burnt all your money someone comes along and does the same thing to you.

    5. John Brown (no body) Silver badge

      Re: This:-

      "Oh wait... That million robotaxis that Elon Musk has promised to hit the roads next year and make a cool $100K for each owned (yeah right) will get in the way of Uber. Quick short Tesla Now! Drive them out of business."

      Speaking of which, did Musk wimp out on naming the Model 3?

      Model S

      Model 3

      Model X

      Was it supposed to be a Model E?

      VW demonstrated their sense of humour by building a Yorkshire-centric EV called the E-Up :-)

      (Sorry, this is a bit of a hijack. Just trying to put a smile on the grumpy old mans face)

      1. Steve K Silver badge

        Re: This:-

        No - I think that Model E is already a Ford designation/trademark

  4. HamsterNet

    But How

    Anybody know what they are spending the money on?

    They get a % of revene from their drivers. They a re not paying for cars, or insurances, or well anything.

    OK so lots of cash spent on the wrong way to do Autonomony taxis using Lidar, but after that?

    How are they a loss making company?

    1. Anonymous Coward
      Anonymous Coward

      Re: But How

      I would assume mostly executive pay and bonus'.....

    2. I ain't Spartacus Gold badge

      Re: But How

      Well there's dog food, swamp insurance, wear-and-tear on yachts...

      I'm not sure how much they've had to pay out in fines yet, or if the regulators are running a bit slower than that? So it could just be spending on lawyers that's rising at the moment - with fines to come in future. It was Facebook that made a $3 billion provision this year for getting fined massively - and given the EU and the US government are circling, I supect that ain't going to be enough.

      But I'd imagine they've had to up spending on self-driving cars - given that the whole business is basically a bet on self-driving taxis (as the CEO admitted). And last year their software managed an average of 13 miles before requiring human intervention, on straight roads, in nice weather in small town Arizona.

      Not to mention the minor matter of killing a pedestrian that their software only detected late, but didn't bother activating the brakes - because the brake activation system was getting so many false alarms they'd fucking disabled it!

      I suspect the real answer is that they're spending it badly.

    3. Anonymous Coward
      Anonymous Coward

      Re: But How

      Maybe the whole enterprise is some sort of debt-management vehicle (pun only partially intended).

      Swimming in debt? Owe money left, right and centre? Then why not consolidate all of your debt into one massive loss-making tech startup?

    4. ratfox Silver badge
      Boffin

      Re: But How

      The % revenue they are getting from their drivers is negative. I.e they are actually paying drivers more than what customers are paying. Because they want market share. They hope that eventually, they'll have so many customers that they can raise prices, or lower costs with self-driving cars. Well, investors hope that. Executives are already rolling in cash, so they don't care whether it ultimately works or not.

  5. Anonymous Coward
    Anonymous Coward

    How does it run a loss?

    It has an app instead of bricks and mortar premises, and has a fleet of hire-and-fire owner drivers.

    It also has the huge advantage of not needing to have cash / payment means on you when you want a taxi.

    It should be able to undercut existing taxi firms and provide a compelling product for users and still make a profit.

    How the hell to do you lose 1 *billion* in three months in that scenario?

    /P.S. I have a highly profitable bridge for sale

    1. dew3

      Re: How does it run a loss?

      Short answer - (a) expansion and (b) predatory pricing - meaning they lose money on every ride.

      More markets and more rides in existing markets == larger losses.

      [edit - and going into new markets also has large infrastructure costs]

      Once they have bankrupted local taxi companies they will raise prices, starting with markets where Lyft and other "ride sharing" competitors have little presence.

      1. JohnFen Silver badge

        Re: How does it run a loss?

        "Once they have bankrupted local taxi companies"

        What's funny, and a ray of hope, is that both Uber and Lyft operate in the US city I live in, but they haven't really got any traction. They're certainly not posing a threat to the half-dozen real taxi companies here. I think this is because most of the existing taxi companies had already been giving all of the benefits you get from Uber and Lyft for years -- except for the cost of the fare.

        But being a bit cheaper is the only thing they are bringing to the table, and that isn't enough to sway that many people.

        Taxi companies are thriving here, and the two largest have even expanded this year. There appears to be zero risk of any of them being bankrupted. Yay!

    2. Roland6 Silver badge

      Re: How does it run a loss?

      >It has an app instead of bricks and mortar premises, and has a fleet of hire-and-fire owner drivers.

      The app needs developers, as Uber hasn't mastered the art of running large virtual teams, they need somewhere to work. Additionally, Uber is a traditional American company, so it needs a large HQ - to impress the investors. So it most definitely has bricks and mortar premises, just not of the type traditional taxi operations possess.

      The fleet of hire-and-fire owner drivers cost money, this is one of the cost areas Uber (and others) are hoping driverless vehicles will enable them to save money.

      Additionally, the app doesn't run without backend servers etc., which require monthly payments to keep them running and bricks and mortar premises - even if they are "someone elses".

      Basically, Uber have significant overheads that mean they are unable to be profitable if they charge the same (or lower) fares than the existing market operators. I seem to remember the price premium for the app was around £4 per fare.

    3. Charlie Clark Silver badge

      Re: How does it run a loss?

      They are paying to get market share: they buy the competition. They spend a lot on marketing and lobbying and, in some places, the subsidise the purchase of vehicles. At least for the first year or so.

      1. Anonymous Coward
        Anonymous Coward

        Re: How does it run a loss?

        The answer for Uber, of course, is to charge drivers to carry passengers for them.

        I'm sure they've thought about it.

  6. Mike Brown

    How are they losing so much? They are a taxi company.

    1. Drive someone to there destination,

    2. Take a fair that equals the cost of that journey + a little bit

    3. Profit

    Or am I missing something?

    1. JohnFen Silver badge

      I think what you're missing is that they aren't doing #2. The fare the Uber charges is not enough to meet their expenses, let alone make any sort of profit.

  7. JohnFen Silver badge

    It's a good start

    Let's hope that they continue on the road to being a failed venture.

  8. Anonymous Coward
    Anonymous Coward

    I'm starting to suspect that Uber was just a "strategic initiative" for the Saudi Arabians (their biggest private investors).. support ride-sharing companies to fight against any increased public transport mindshare and to increase congestion on the roads -> a bit of difficult-to-measure support for the oil prices -> what's a few billion lost when you might make 10x back from the oil?

  9. Anonymous Coward
    Anonymous Coward

    Meanwhile

    People without an MBA, and indeed often without a degree, manage to start and run profitable minicab firms. Our local free paper is profitable. And people manage to meet, fuck and get married (the last two not necessarily in that order) without an app. And Amazon adopted the business model of a traditional mail order company and does it (on the whole) better.

    It's almost as if "disruptive" pure-IT technology is mainly there to scam investors, not run a successful business.

    1. Anonymous Coward
      Anonymous Coward

      Re: Meanwhile

      >People without an MBA, and indeed often without a degree

      It is quite scary looking at the Mensa membership - not many successful business people, when you would have thought there would have been a significant number...

      1. Wellyboot Silver badge

        Re: Meanwhile

        Being super smart doesn't equate to wanting an olympic sized swimming pool full of folding money.

        Why would Mensa members sully their life with meeting 'normal' sociopathic company board members?

        1. Anonymous Coward
          Anonymous Coward

          Re: Meanwhile

          You remind me of when Rutherford was interviewed by a newspaper. His one time lab assistant, Pye, was by then very rich on the proceeds of his eponymous company. Rutherford was asked how much a professor earned and gave a number - I think around £400 a year, probably around £100k at today's rates.

          He was asked if he was envious of Pye, who had risen from lab technician to millionaire.

          "Of course not," said Rutherford, "think of the awful people you have to deal with in business."

          (I may not have this exactly right but the gist is surely correct; we were told it by a professor at the Cavendish.

  10. Charlie Clark Silver badge
    Thumb Up

    Minicab disruptor

    Have an upvote for that. Now that both Lyft and Uber have IPO'd there looking to gild the lillies differently. Uber is busy talking up Uber Eats (money pit) and Uber Freight (money pit in a contracting market) and the potential of cross-sales. Because, apparently, the kind of fat and useless couch potatoes that use food delivery services regularly are also desperate to use taxis.

    I don't really care about these companies but I do worry knowing that some of my banks or insurance companies will have put some of my savings into them. :-(

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