Over the holiday, WSJ published Uber financials. Didn't see much analysis of it, but I have questions. wsj.com/graphics/uber-…
Here's the last leaked Uber financials, from 2014, and the current financials from 2017. Accounting may have changed over time, but the expense line items remain the same. 
You can put them into a spreadsheet side by side, and look at the expense items as a percentage of net revenues to get a sense for evolution of the P/L as Uber gained scale. Obviously a few things jump out.
1. Gross margin has deteriorated, opposite of what would expect from scale
2. S&M has leveraged and is about inline with internet cos
3. R&D looks a little high as % of revs
4. G&A hasn't leveraged and is way too high
5. WTF is operations and support and why isn't it in COGS?
2. S&M has leveraged and is about inline with internet cos
3. R&D looks a little high as % of revs
4. G&A hasn't leveraged and is way too high
5. WTF is operations and support and why isn't it in COGS?
If I close my eyes, I would imagine Uber's expenses as % of revs looks like:
40% COGS
20-25% S&M
10-15% R&D
5-7% G&A
Which results in a 19% margin. But with Operations and Support not accounted for, totally changes steady state margins.
40% COGS
20-25% S&M
10-15% R&D
5-7% G&A
Which results in a 19% margin. But with Operations and Support not accounted for, totally changes steady state margins.
Support is currently running 18.4% of revs. Say that scales to 10-15%. Gives you a steady state margin of 4.5-9.5% and a midpoint of 7%.
Softbank just bought in at ~$50B, they def want to IPO at $100B+. Let's say they get valued at 25x EBITDA, because why not, need $4B in EBITDA. At a 7% margin, that's $57B in revs. It looks like they will do ~$8B this year.
Realistically, since I am using a steady state margin, I should use more of a steady state multiple. Let's say 15x. To get to $100B need $6.7B in EBITDA and $95B in revs. $95B in revs is about $450B in gross bookings. Priceline will do about $110B in gross bookings next year.
So what I'm saying is I don't understand Uber's expense structure. And it's not "Lol this is a non profit funded by VCs". They obviously have a roadmap to profitability. My question is which expense lines are they going to massively scale. My guess is S&M has to come down to 10%.
I would've guessed a steady state margin at 15-20%. To get there, need S&M + Support + R&D to be a total of 30-35%. Can't drive R&D much below 10%. So S&M+Support has to = 20-25% total, or Gross Margins have to go way higher than 60%, which seems unlikely given trajectories.
Anyway, still find Uber to be one of the most fascinating companies of all time and, having watched Dara for years at Expedia, am very curious to see how he evolves the strategy and what it does to the P/L.
Lastly, as I said in this thread, I still am confused why they don't raise the driver splits
