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Uber's leaked financial info doesn't tell the whole story

by Noah Kulwin
Aug 24 2017, 9:42am

Uber hasn’t had a CEO for two months, some of its investors recently wrote down the company’s value by 15 percent, many key executive positions are unfilled, and its biggest U.S. rival has gained market share.

But what, Uber worry? The company’s second-quarter 2017 financials, first reported by Axios on Wednesday, appear to show that its business is doing fine. However, those financials don’t necessarily show the full picture of Uber’s business. We’ll only get to see that when (if) the company goes public.

The second-quarter numbers show that Uber was able to increase “gross bookings” (the amount that customers pay for rides) by 17 percent to $8.7 billion. This translated to $1.75 billion in “adjusted net revenue,” or how much Uber collected from those rides, which is more than double the $800 million Uber pulled in during the same time in 2016.

Critically, Uber continued to narrow its loss. In the first quarter, Uber’s sales growth outpaced its losses, and the new leaked numbers show that its “adjusted net loss” fell another 9 percent, to $645 million, from the previous quarter. So while Uber is still hemorrhaging money, it is losing less money relative to what it’s bringing in than before.

But as critics and experts point out, these numbers are incomplete. There has never before been a privately held tech company of Uber’s size (it is privately valued at around $70 billion), and public companies are forced to publicly disclose quarterly financial reports that also discuss possible future challenges to the business.

Uber’s leaked financials don’t spell out how it plans to deal with increased global competition, whether these numbers have been audited, and the extent to which the company’s various scandals have impacted its business; these include its lawsuit with Google’s self-driving unit Waymo, multiple high-ranking executive departures, and years of battle with both regulators and its own driver fleet.

“While the revenue growth looks good, one would want to see the full picture, and moreover benchmark against Lyft,” New York University Stern School of Business professor Robert Seamans told VICE News. “We won’t get a good look at Uber’s financial health until the company files to go public.”

In Uber’s defense, the company’s rapid rise in size and private market value was because of its legions of current dedicated customers. And as Seamans points out, Uber’s growth despite its recent troubles “helps highlight how “sticky” these services are for consumers.

“In principle, a consumer who’s upset with Uber because of the investigation of sexual harassment or other issues could switch to Lyft or another competitor,” Seamans said. “In practice, though, it looks like the switching costs for consumers is high enough that few actually do make the switch.”

A representative for Uber confirmed the authenticity of the leaked financial information but declined to comment further.