Uber, losing billions, freezes engineering hires
The sentiment on UBER recently is that they are only surviving by subsidizing rides and are out of control &#x2F; there&#x27;s no future business there.<p>But that is not an accurate portrayal, here&#x27;s what&#x27;s going on when you look at their un-editorialized results (1):<p>- Headlines have portrayed UBER as losing $5b this quarter. This is the easy one to address as this article touches on - UBER paid out almost $4b in stock based compensation (one time, due to IPO) that inflated their loss number. The more accurate portrayal is that UBER burned ~$1.2b this quarter on operations.<p>- Of their remaining $1.2b operating loss almost 50% of that is from UBER eats subsidies. They paid $544m more to drivers to deliver food than they took in. Why? (a) It is their fastest growing (by %) division (2) It&#x27;s arguably the most valuable battleground in logistics - developing a &quot;last mile&quot; delivery network at scale.<p>- Their core business - ridesharing - has improved their gross margin and unit economics quarter-over-quarter to the point that the discounting is almost non-material (less than $22m total worldwide this quarter, representing less than 1&#x2F;2 a percent of total ride sharing revenue).<p>- They have &gt;25,000 employees and &gt;50% of those are international in new markets that require heavy HR spending. Their move to clip 400 marketing employees (25% of entire division) last month implies the CEO has confidence that there is a lot of fat in employee base.<p>- Add to that other losses in their &quot;other bets&quot; which is almost certainly their freight brokering network at -$50m, and the losses appear to be diminishing.<p>(1) <a href="https:&#x2F;&#x2F;investor.uber.com&#x2F;news-events&#x2F;news&#x2F;press-release-details&#x2F;2019&#x2F;Uber-Reports-Second-Quarter-2019-Results&#x2F;default.aspx" rel="nofollow">https:&#x2F;&#x2F;investor.uber.com&#x2F;news-events&#x2F;news&#x2F;press-release-det...</a>