Uber Technologies Inc. (UBER) makes money by running a ride-hailing service, and takes a cut of the fares. The company also has a food order and delivery business, Uber Eats, and a freight shipping business, Uber Freight. These work similarly to ride-hailing, except that they match people with delivery drivers and freight shippers, respectively.
Key Takeaways
- Uber Technologies matches consumers looking for rides, food delivery, or shipping with people selling those services.
- Uber’s largest source of revenue is its ride-hailing business, which is also the only segment that earns a profit.
- Uber’s other business segments are Uber Eats, Uber Freight, and the Advanced Technology Group.
- Uber completed the sale of its self-driving car unit on January 19, 2021.
- As of September 2021, Uber’s market cap is about $75.98 billion.
Uber’s Financials
As of September 2021, Uber’s market cap is about $75.98 billion. Total revenue fell 14.3% during the company’s 2020 fiscal year (FY), which ended December 31, 2020. The company, which has consistently struggled to make a profit, posted a net loss of $6.8 billion for the year. However, it was an improvement from the $8.5 billion net loss posted in 2019.
Uber’s adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) across all of its businesses is slightly better, but still registered a loss of $2.5 billion in 2020.
In its latest report, for the second quarter of 2021, net income was $1.1 billion on $3.9 billion in revenues—but the bottom line still showed a loss of $509 million (adjusted EBITDA).
Uber’s Business Segments
Uber has made some changes to the way it classifies its reportable business segments as of Q2 2020. The Rides segment has been renamed Mobility and the Eats segment has been renamed Delivery. Additionally, Uber sold its JUMP electric bike rental service, which had been categorized under its Other Bets segment. Certain immaterial offerings previously organized under Other Bets have now been moved to the Mobility segment.
Uber now has just four operating and reportable segments: 1) Mobility; 2) Delivery; 3) Freight; and 4) ATG and Other Technology Programs. Uber also includes an “All Other” category, but its contributions to the company’s overall business are immaterial. It is not included below nor in the pie charts above.
Mobility (formerly Rides)
Uber’s Mobility segment is its flagship ride-hailing business. This segment is Uber’s largest, making up 55% of the company’s revenue in 2020, but down 43.1% from 2019. Uber reports adjusted EBITDA for its reportable segments. Even using this more generous measure of profitability, only Uber’s Mobility segment is profitable. The segment posted adjusted EBITDA of $1.2 billion in 2020, down 43.6% compared to the previous year.
Delivery (formerly Eats)
Uber’s Delivery segment offers an app that lets people order meals from restaurants remotely for either pickup or delivery—similar to GrubHub or Doordash. If they opt for delivery, an Uber driver nearby—in a car, on a bike, or on a scooter—will go to the restaurant to pick the order up and bring it to you. The segment was first launched in 2014 as Uber Fresh, before becoming Uber Eats in 2016. The segment, which is now officially reported under the name Delivery though the consumer site/app is still called UberEats, generated 35% of Uber’s revenue in 2020, seeing revenue grow 178.7% to $3.9 billion.
Freight
Launched in 2017, Uber Freight connects truck drivers to shippers looking to move freight in the same way that its ride-hailing business connects drivers with people looking for a ride. Uber Freight only makes up a small portion of Uber’s total revenue—about 9% during 2020. But it is growing, up 38.3% from 2019.
Advanced Technologies Group (ATG) and Other Technology Programs
Uber’s ATG is its program to develop self-driving vehicles and ride-sharing technology. The other major part of this segment is Uber Elevate, a program to develop vertical takeoff and landing (VTOL) aircraft ride-hailing. This segment is composed of very early-stage projects, and registered revenue of just $100 million in 2020, up 138.1% from the previous year.
Recent Developments
California Laws
Currently, Uber classifies its drivers as independent contractors rather than employees, a distinction that allows Uber to avoid paying minimum wages, paid sick and family leave, unemployment insurance, and workers’ compensation insurance. But California’s state law, Assembly Bill 5 (AB5), which went into effect on Jan. 1, 2020, makes it more difficult to classify “gig” workers as independent contractors. On August 13, 2020, San Francisco Superior Court Judge Ethan Schulman refused to grant Uber more time to appeal an earlier decision requiring the company to classify drivers in the state as employees.
On November 3, 2020, California voters approved Proposition 22 (Prop 22), ensuring that AB5 will not apply to Uber, Lyft, or Doordash. Prop 22 declares app-based drivers to be independent contractors, not employees—though it does provide certain “engaged time” protections for them, such as healthcare subsidies, and accident and accidental death insurance.
On Aug. 20, 2021, Alameda County Superior Court Judge Frank Roesch ruled that two sections of Proposition 22 were unconstitutional and that the measure as a whole was unenforceable. Uber and Lyft announced they would appeal, and Prop 22 remains in effect as the court battles continue.
London Laws
On Sept. 28, 2020, Uber’s transportation license in London was restored after it had been revoked in November of 2019, the second time it has been revoked in the last three years. London’s transportation regulators cited Uber’s failure to prevent unauthorized drivers from using their app, potentially endangering riders. The current license lasts for 18 months and is conditional on Uber providing periodic safety reports.
On Feb. 19, 2021, the U.K.’s supreme court ruled that 25 drivers who brought a case against Uber are employees, not contractors, and should be entitled to the rights employees have, such a minimum wage and vacation pay. While the ruling only applies to the drivers involved in the case, it sets a precedent that could make it easier for other workers to gain the status of employees in the future.
Self-Driving Unit
On December 7, 2020, Uber announced that it was selling its self-driving-car unit to Aurora Innovation Inc. Uber completed the sale of the unit, which was known as its ATG Business and was included within its ATG and Other Technology Programs segment, on January 19, 2021. The deal included a $400 million cash investment by Uber, giving it an approximately 26% stake in Aurora. The deal comes as CEO Dara Khosrowshahi seeks to restructure Uber and make it a more profitable business by scaling back expensive aspects of the company that have failed to gain traction.
How Uber Reports Diversity & Inclusiveness
As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Uber and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Uber releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.
Below is a table of potential diversity measurements. It shows whether Uber discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Uber breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.