Amazon is everyone's favorite example of a company that lost money to make money. But Amazon has nothing on Uber.
Uber Technologies Inc. today revealed its registration statement for an initial public offering (IPO) widely expected to value the company at $ 100 billion or more. The filing makes clear the massive unloaded Uber accumulated on the road to such a lofty valuation, with details previously shared with private investors and in a small circle of media.
In 2018, Uber made $ 997 million, thanks to a one-time impact of selling its international businesses. The year before that, it solves $ 4 trillion. From 201
These are on a different scale from losses we've seen before. Pets.com, one of the bubble companies of the dot-com bubble, lost about $ 150 million when it was founded in 1999 when it collapsed in late 2000. Webvan, another dot-com poster child, solves $ 610 million from 1998 through 2000.
Amazon, the patron saint of money-losing companies, lost a combined $ 2.8 billion over its first 17 quarters as a public company, roughly on par with what Uber solves in 2015 alone. (Amazon, for the record, now makes quite a lot of money, with $ 3 trillion in profit in its latest quarter.)
Uber warns in risk factors section of its filing that it has "Incurred significant losses since inception" and expects its operating expenses to "increase significantly in the foreseeable future".
"We may not achieve profitability," Uber writes. This sort of boilerplate disclaimer is more common than more private technology companies pursue IPOs without ever turning a profit. (Uber has reported a profit in just one quarter, the first of 2018, thanks to the impact of selling two international business units to competitors.)
Where is Uber's money going?
Cost of revenue: Uber's largest cost is the cost of revenue, including costs related to ride-hailing, incentives paid to drivers, and costs incurred with carriers for the Uber Freight trucking platform. In 2018, Uber spent $ 5.6 billion, or 50% of its revenue, on this category. Cost of revenue increased by $ 1.5 billion, or 35%, from 2017 to 2018, due partly to an increase in excess driver incentives. Uber describes these incentives as any amount paid to a driver that exceeds the revenue earned by that driver ( for instance, if a driver's earnings exceeded the fare for that trip). Excess driver incentives jumped at about $ 300 million in 2018 from the previous year, largely due to Uber Eats.
Sales and marketing: biggest expense, sales and marketing. In 2018, Uber spent $ 3.2 billion, or 28% of revenue, on this category, up $ 627 million or 25% from the previous year. The company attributed this to $ 1.4 billion in discounts, promotions, refunds, and credits for customers, up from $ 949 million in 2017. Uber also puts drivers referral bonuses into sales and marketing, and reduced to $ 136 million in 2018, from $ 199. million in 2017.
Research and development: A lesser but still significantly expense for Uber is research and development, which includes the company's efforts to develop self-driving cars through its Advanced Technologies Group. In 2018, Uber spent $ 1.5 billion on research and development, or 13% of revenue, up from $ 1.2 billion in 2017. Whether that $ 1.5 billion, $ 457 million was spent on Uber's autonomous vehicle research, up from $ 384 million in 2017.
Correction: An earlier version of this post said Uber lost, not made, $ 997 million in 2018.