Welcome back to this week’s transcribed edition of Equity, TechCrunch’s venture capital-focused podcast that unpacks the numbers behind the headlines.
And because it’s another week, why not another emergency episode? This time Kate Clark and Alex Wilhelm popped in the studio an hour before they were due to record the regular episode in order to dig into the Uber S-1. Not only did they dig into it, but they did so in real-time. That’s what happens when you only have 10 minutes to get through almost 300 pages of numbers. And if it’s numbers you like, this is the episode for you.
The duo talks Uber’s profits and losses and provides context into it all. And just to prove just how juicy this ep is, Equity Shots tend to be about 15 minutes long. Not this one. There was a lot to get to. And who better to lead the conversation than Kate and Alex? So join them as they walk you through what the Uber S-1 holds.
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Kate Clark: Hello and welcome to Equity Shot. This is TechCrunch’s Kate Clark, and I’m joined today by Alex Wilhelm of Crunchbase News.
Alex Wilhelm: Hello.
Kate: We are going to tackle some breaking news. But, a warning from Alex first.
Alex: Yeah, so it’s 2:09pm here on the West Coast on Thursday, which means that the S-1 dropped, I don’t know, about 45 minutes ago, maybe an hour. And there was a lot to do before the show, but we wanna get this out as soon as we can, so we did our note dock by hand, and we got the S-1 pulled up, and we have a lot to go through. But, there may be an awkward pause in this, because we don’t have every single number pulled out ahead of time.
Kate: We are literally scrolling through the document live. We have a piece of paper taped to the wall in the studio with a very rough outline of what we’re gonna talk about. And we agreed that we’re going to try to take it slow and carry you guys through these important numbers as best we can.
Alex: Yes, and we are gonna start with yearly numbers to stay at the highest possible level, and we’re gonna talk about revenue first.
Alex: Now, keep in mind that we’re not talking about bookings, which is the total spend on Uber’s platform, we’re gonna talk about revenue, which is Uber’s portion of that overall platform spend. So, in 2014, because the S-1 goes back all the way to 2014, Uber had revenue of 495 million. That nearly quadrupled in 2015 to 1.99 billion … call it 2 billion flat. In 2016 that grew to 3.85 billion. It expanded to 7.9 billion in 2017, and 11.3 billion in 2018. So, basically a half a billion, to 11.3 billion from 2014 to 2018.
Kate: Yeah, quick reminder, a lot of these we’ve seen. I know there’s been plenty of reports highlighting Uber’s 2018 revenues of around 11 billion, but this is the first time we’re getting a full glimpse into financial history all the way back to 2014, and then also losses, which were interesting.
Alex: Very, very interesting.
Kate: I’ll quickly run through losses beginning in 2014. So, Uber lost 670 million that year, they were not profitable. The next year they lost 2.7 billion, again, not profitable. The next year they lost 370 million, guessing there was a big … oh, no, that was the year of the divestiture of … we just talked about this.
Alex: Uber China.
Kate: Of, yes, which they sold to Didi. The following year, 2017, they lost 4 billion, again not profitable. And last year they lost … well actually, last year they were profitable, they … they don’t have losses, they have profits. I can’t even read it when there’s profits because it’s so rare. 997 million. So, nearly a billion dollars in profits in 2018.
Kate: And why is that Alex?
Alex: So there’s a bit of a nuance here. So, Kate’s correct when she runs through the bottom line numbers there, but what you have to keep in mind is Uber’s not just reporting an operating loss number. That’s the full gap, net loss, and that’s inclusive about things that they sell. So, they have a three billion dollar loss in operations in 2018, but about a billion dollars in gap profit. And that comes from a couple of things that, if you really wanna kind of tag along with us, are on page 89 of the S-1. By 89, I actually mean 90, and that’s because in 2018, they had a 3.2 billion dollar gain on a diverstor. So, they sold something, they made a bunch of money off of that, and that plugged the hole that was their operating loss, bringing them into positive territory. So, what we’ve seen from Uber is very quick growth, a history of steep operating losses, and two years in which divestors appear to have really helped the company move either closer to profitability, or into that space. But, if you’re just thinking about how the company’s actually performing on an operational bases, IE the things it does, it’s still deeply unprofitable today, roughly on par with 2016, in 2018, with but a three billion dollar operating loss.
Kate: Right, I was just gonna say, let’s highlight that operating loss, because if Uber had not divested assets, which was Grab and Yandex, they would still be losing billions this year. So, as we talked about when Lyft went public, Lyft was losing more money than almost any other pre IPO company. Uber’s in the same boat, and it’s very easily making some of the most money at the same time, as any company that … and this is going to be the … according to Axios … the eighth largest IPO in history.
Alex: That’s astounding.
Alex: We’re talking about, roughly … if you didn’t catch the news before … people are expecting a 10 billion dollar offering in the IPO, and that’ll be a hybrid of both primary shares and secondary shares. So, existing shareholders and new equity, they’ll sell. And the company is targeting, again rumors say, an evaluation of between 90 and 100 billion dollars. Which, Kate, as you’ll recall, is down from that 120-
Kate: It is.
Alex: -billion dollar number that was floated. And speculation is that, that’s because Lyft kind of when out and set some rough prices on what ride sharing revenue’s worth, and that Uber’s gonna … or get this 90 to 100 billion dollar range because of that. What do you think about that from a quick perspective?
Kate: Yeah, there are some rumors that they’ve reigned in their offering a little bit from like say, 120 billion to about 100 billion, as a result of Lyft’s stock volatility in the first few weeks as a public company. I think it’s probably less that and more lowering expectations so they can have a big pop in their stock as they debut.
Alex: They may even reprice higher. I mean-
Kate: Exactly.
Alex: -we’ve seen a number of companies raise their range, price at the top of that, or even ahead of that. So, it’s a bit of a dance.
Kate: I mean, as much as these companies are identical, Uber is a global business and Lyft isn’t. But, Uber is a massive operation, and it’s just five times larger than Lyft, and I think the IPO is going to be …
Alex: Yeah and we’re going to talk through some of the other numbers including, I think, Uber Eats’ booking figures later. But, the key distinction there, if you’re playing apples and oranges, or apples and apples with the Lyft and Uber IPO’s, is that Uber’s not just North American, it does not just do ride hailing, it has the Uber Eats business, the Uber Freight business, and a minority stake in a number of competitors around the world.
Alex: But, before we dig into that nuance, I want to talk quickly about the quarterly results. And if you’re not familiar with why this matters, what you’ll see is a lot of companies end up with kind of wonky numbers in their full year results, as we saw today. So, what you can do is by drilling down into the quarterly results, get more of a nuanced, nitty gritty look at what’s going on. So, I’m gonna bore you with some numbers, so roll with me here. Let’s take a look at the most recent quarter. The quarter ending December 31, 2018, and that’s the most recent because Uber hasn’t closed the books yet on Q1, it just ended.
Alex: So, now we’re gonna wait and then we’ll get that soon enough. But, in the fourth quarter of 2018, Uber had revenue of 2.97 billion, so, we’d round that up to 3.0 billion dollars, because that’s how rounding works. And in that quarter they had a loss of operations, an operating loss, of just over a billion dollars, so 1.05 billion dollars. So, roughly 3 billion revenue, roughly 1 billion in operating losses, and that’s because they spent 4 billion in the quarter, and that’s how you can see the numbers shake out.
Alex: So, Uber still is, in the most recent period, far from profitability. And to be a bit negative, I’m gonna try to avoid having a general bend to my views, but they recorded 2.944 billion in revenue in the 3rd quarter of 2018, and only 2.974 in the 4th quarter, which is effectively no growth at all, and they lost another billion dollars in the quarter. So, we’re some flattening growth, Kate, I think.
Kate: Right. So if we’re seeing flattening growth, I mean if you’re a public markets investor, what are you thinking when you’re looking at this S-1?
Alex: Well, there’s always a tension between growth and losses, and the faster you grow, the more you can lose. But here’s the-
Kate: But, don’t you wanna see a clear path to profitability?
Alex: Before you even get there I’d say if you’re not growing you can’t lose, and Uber lost a billion dollars due to operations in Q4, while posting effectively no revenue growth. That’s a weird place to be in if you’re gonna go public. So, I don’t quite know how to square that. They do have a growth story, they do have a way to discuss growth. But, Kate if they don’t grow how could they ever get a path to profitability?
Kate: Right, so that makes me curious how public market investors are gonna treat Uber when it goes out. I mean it’s gonna have a high demand of course, just like Lyft did, especially in those final days, but will it have the exact same problem where a lot of investors sell and begin short selling the stock just right off the bat, and then we see a lot of volatility and some crazy … [crosstalk 00:08:34].
Alex: It’s gonna be fascinating. But they will be, if they’re selling 10 billion dollars in shares, both primary and secondary, they’ll be a larger float than we saw with Lyft, and that could damped volatility. I mean, this is gonna be a well watched IPO, and all things that can happen will.
Alex: But if you want to dig into the S-1, I really recommend taking a look at the quarterly results, it’s on page 121, if you’re following along, and there’s a lot of good stuff in there. And Kate, before we move on, can we talk about percentages for a minute? Because, I think there’s som interesting stuff to be done there.
Kate: Of course.
Alex: Okay. So, I you go, if you’re following along at home, to page 123 of the S-1, there is the same normal income statement, but done as a percentage of revenue. And what this helps you do is see where Uber is driving efficiencies in it’s business as time has gone along. So, for example, we know that in Q4 of 2018, Uber spent 54% of its revenue on cost of revenue. Now that’s a slightly adjusted number. What that means is they had a gross margin of roughly 46% before they take into account all their operating costs. So, from there we can see they spent 14% on operations and support, 33% of revenue on sales and marketing, 12% on R&D, and 19% on GNA, before 4% on depreciation and amortization. That works out to 135% of revenue in the 4th quarter, hence their loss.
Alex: But, what you can see looking backward in time is how things have gotten better and not. So, for example, in I don’t know, the March 31, 2017 quarter, operations was 20% of revenue, now it’s 14, but other things haven’t gotten any better. GNA was 19% in the March 31, 2017 quarter, and 19% in the December 31, 2018 quarter.
Kate: Yeah, I’m noticing that sales and marketing in 2017, they spent 36% of revenue, and that did drop off a bit going down to 26% in 2018, but this last quarter it’s back up to 33%. So, I’m wondering why they’d be upping their spending in that area.
Alex: So this is actually a pretty good Segway to something that I want do talk about, which was how Uber is talking about paying drivers and … because, I think if I recall correctly, Uber takes things in two different ways, you can talk about discounts, and you can talk about incentives. I forget how Uber itself actually accounts for those. But, one thing we’re keeping an eye on is how Uber, essentially, keeps both sides of its marketplace alive, because they have to drive demand on the riders side, and provide supply on the drivers’ side. And there is a quote from the risk section that really stood out to Kate and I as we were reading this S-1, before taping, in like the 10 minutes that we had. Welcome to breaking news everybody.
Alex: Kate, can I just quote this section, is that gonna be best?
Kate: Yeah, just quote it.
Alex: Okay, so everyone roll with me while I put on my reading glasses and this is how Uber discuses the risks of driver happiness compared to financial incentives. “While we aim to provide an earnings opportunity comparable to that available in retail, wholesale, or restaurant services or other similar work, we continue to experience dissatisfaction with our platform from a significant number of drivers. In particular, as we aim to reduce driver incentives to improve our financial performance, we expect driver dissatisfaction will generally increase.” So there is at once, a part to profitability and a discussion about how driver supply will become tighter in time.
Kate: Right, and I think this is so important, and I hope a lot of attention is drawn to the fact that Uber’s admitting that we know our drivers are unhappy and it’s likely they’re going to become more unhappy. I think we all knew this was coming because in the lead up to Uber and Lyft actually dropping their S-1s, in between the time when which they had filed confidentially, they’re both discounting all of their rides because they were trying to augment their market share, and I mean … that was great for their businesses, and for Lyft it actually worked, and they did grow their market share in that time, but the drivers pay the price.
Alex: The drivers pay the price. And we’ve seen, for example, the recent Uber related strikes in … I think it’s LA, So Cal-
Kate: Yes.
Alex: -and drivers kind of banding together to argue against changes to the pay structure, and as a independent observer, I think they have a point. But at the same time Uber’s cost structure demands that the company take more of each ride over time, because it needs to cover its expenses.
Kate: That’s Uber’s path to profitability, is making more on each ride and taking money away from drivers. And then the company’s are both … Uber and Lyft are both trying, it seems, to do what they can for their drivers, like as we’ve talked about, they gave them the opportunity to participate in the IPO, Lyft.
Alex: Kind of, right.
Kate: I mean yeah, what does that really mean if you’re a driver who’s never bought public market stock and has no idea how and what they’re doing.
Alex: If you bought it at the IPO price you’re underwater right now, so.
Kate: Exactly. So, I mean, and I was just talking to our transportation reporter, Megan, about this, and she’s angry that they’re doing that without providing adequate resources in helping them understand what it even means to buy public market stock. Anyway I-
Alex: There’s an analogy there that [inaudible 00:13:04] economy as a whole, and both these businesses and how they offload costs, and there is a section here that talks about how if drivers became employees it would definitely change Uber’s business, which is a polite way of saying …
Kate: Yeah, and last thought on this before we can move on is, so Lyft held their IPO in LA as opposed to like in New York where the headquarters are. They held their IPO in LA because that was their largest market and they saw that as sort of like a hat tip to their drivers, so I’m curious where you think Uber will hold it’s IPO?
Alex: I mean, I really wanna make a joke here but I’m probably just gonna go ahead and not, and say New York. Given the scale of … so Lyft raised … gosh, it was 2.4 billion in it’s IPO, give or take. This is gonna be 10, according to rumors, we don’t have a price range yet or a share count, so we’re kind of speculating, but that’s’ four X. That’s a lot of shares you have to sell, you probably have to go put on a tie and go to Wall street, and you know do the whole thing.
Kate: I mean Lyft’s IPO was still massive though, and they were able to do it in LA.
Alex: Lyft was a massive IPO, and a huge net loss. And then Uber came along was like, “What’s up?”
Kate: Yeah.
Alex: “We are you but larger and more global.” So let’s drill back into the numbers a bit and talk about bookings. Now, bookings are the platform spin, so if you take a ride on Uber that’s say $16, Uber might get three or four of that. But, a 16 goes into the bookings number. And Uber talked about this a bit, again if you’re following along, I’m on page 2, so very hard to find. They’re talking about how their gross bookings grew from 18.8 billion in 2016 to 41.5 billion in 2018. That’s the kind of growth that has made Uber the phenomenon that it is. It’s very rare to see companies scale that quickly at 1000th the size of spend. They have tapped into a global boom in consumer spend, a trend that really changed how we get around, changed how I got to TechCrunch’s office today. I didn’t have to walk, or try to chase down a cab with an ax.
Kate: I also took an Uber to the office today.
Alex: I thought it was pretty ironic, but here you go.
Alex: Anyways, that’s why as we talk about the losses and the revenue and all that, we’re talking about the nuances of the business in it’s most recent incarnation, the most recent stats. But, it’s that amazing growth they have seen that put them in the position they are today, to be as big as they are, and as influential as they have become. So, it’s pretty exciting.
Alex: Let’s talk a little bit about who owns what, because this deal is gonna make a couple of people annoyingly wealthy. Sadly no one in the room at the moment is getting a penny out of this.
Kate: I wish.
Alex: I looked at producer like, “Is there something that I didn’t know?” Sadly no, but Kate you were gonna talk us through this, so please.
Kate: Yeah, I will. This is gotta be, hands down, the largest liquidity event for really any VC funds ever in history. A lot of these firms invested maybe tens of millions of dollars, say 30 million dollars, and they’re making billions of dollars. Like just let that sit in for a second, it’s insane the kind of money that firms and individual people are going to make from this. So, let’s just start with Uber confounder Travis Kalanick. So, Travis Kalanick, as you all know, was ousted from Uber for a lot of reasons. About two years ago Dara Khosrowshahi has since stepped in as CEO. Travis still owns 8.6% of the pre IPO shares, which are worth approximately 9 billion dollars. I mean Travis Kalanick has already sold shares before, he’s already very wealthy man, he’s going to be even more wealthy assuming he does sell these shares at some point after the IPO.
Alex: Maybe his yachts will have smaller yachts that kind of follow them along.
Kate: Yeah I mean he’s gonna … Its just … it’s really unfathomable for me to even … like that just amount of money I have a hard time even imagining, but I think what we’ll see is a lot of these people are gonna reinvest in the ecosystem. Like, Travis has a VC fund, although it doesn’t get a lot of attention, it does exist, so anyway. He’s gonna have a lot of money, he’s probably gonna reinvest a lot of that money in startups and other things.
Kate: Continuing, so Soft Bank owns 16.3% of Uber.
Alex: But they’re not down as Soft Bank. What’s their title in this?
Kate: So, if you’re reading with us, it says [SB Caymen 00:16:53], that is a fund that is owned entirely by the Soft Bank Vision Fund, specifically.
Alex: Okay.
Kate: So this is the vision fund.
Alex: People might miss that, I just want to kind of-
Kate: Right, no totally. That happens. I often get a little confused when I’m looking at S-1s, because you’ll see things like … just bizarre. You have to read the fine print, literally. That’s listed below where it explains. So, yeah so that’s Soft Bank. Then we have Benchmark, they have 11%. Benchmark has also sold shares, so they would’ve had more had they not sold, but they’re probably very happy with the paydays they’ve already had.
Alex: Yeah, 11% of 100 billion dollars is 11 billion dollars.
Kate: Exactly.
Kate: And then we have Expa, which is a startup studio that is owned by Garret Camp. Garret Camp is a confounder of Uber, he owns 6%. So, he’s listed twice, because Expa is his, so 6% and 6%, so that means he owns 12% just through different entities.
Alex: I’m always concerned when I’m reading the ownership section, because this is where it gets a little bit dicey.
Kate: It does.
Alex: So either six or 12, it’s only a six billion dollar difference, so it’s a rounding error.
Kate: Doesn’t matter, he gets billions of dollars. And then finally, let’s see, we have the Saudi Arabia public investment fund, they own 5.3% of Uber. So, again worth billions of dollars.
Alex: Billions.
Kate: And lastly, again, these are just principal stakeholders so these are people who own 5% or more. Alphabet owns 5.2% and that’s Google. Google also owns 5% of Lyft, so they just made a billion dollars. Well, they have a billion dollars worth Lyft stock, approximately, right now. So, they’re making billions of dollars on these two IPOs, and they were smart to invest in both companies.
Alex: One of the really rare times you see one investor having to play on both sides of a kind of a tech area.
Kate: And in IPOs that were like right on top of each other too, I mean that’s …
Alex: I can’t recall this ever happening in tech history.
Kate: Not at this scale.
Alex: Definitely not at this scale, for sure. It may actually be a first in which one corporate venture capital fund has had money in two successive, successful, IPOs, in the same sector that were direct, domestic competitors.
Kate: Yeah, and it’s funny because there was a lot of flak around the time that Alphabet made these investments, kind of saying like, “You’re investing in two competitors, like what are you doing? What’s your strategy,” but as we see now it doesn’t matter, it worked out really well for them.
Alex: Their strategy is laughing all the way to the bank I feel, and then also maybe selling Waymo to either of these companies, which is probably gonna work out [inaudible 00:19:05].
Kate: I think they have a long term vision.
Alex: Yes.
Kate: So there are a lot of other investors that aren’t gonna be listed on here because they own smaller stakes. And that includes some of the earliest investors, Lowercase Capital, which is Chris Saka’s fund. First Round Capital, which was an investor in Uber’s first round, and Menlo Ventures, which was the company that was the one …. you know, the company that was mentioned in the … the firm mentioned in the Forbes article who stole [Andrician’s 00:19:26] lead in that series B, and ended up acquiring a big stake.
Kate: They have sold a lot of their stock along the way, and made 100s of millions of dollars. They still own more than 2% of Uber.
Alex: And investors do that, essentially, as a way to de risk their investment in a company. They take a little money off the table, that returns to their LPs, their LPs are happy.
Kate: Yeah, it makes their LPs really happy, and it’s like kind of why not? Especially if you’re able to still keep a good portion of the company in your hands, and then wait for that IPO, why not make 100s of millions of dollars and return multiple funds along the way if you can?
Alex: I mean, the other argument is YOLO, but I mean … but all the smart investors took some money off the table, it seems, along the way. And I think there’s a lesson there for companies that get this big and don’t go public for this long.
Kate: One last thought about stakeholders. I was looking a pitch book to see who was like investors in the seed around individual investors; Jeff Bezos, Brian Chesky, Airbnb confounder. I mean you name all the big VCs like Scott Banister, I mean it just a really interesting lineup. My guess is most of those have sold their shares in the secondary market or something, but I was surprised to see that.
Alex: Or they got diluted to the point they don’t show up anymore. Because if you put 100k into the initial thing, there’s been some money going in after, your stake will go down as time goes along due to [crosstalk 00:20:39].
Kate: Exactly, it gets diluted along the way. But I just thought that was kind of funny to see.
Alex: And people say Silicon Valley is a small circle, I mean if you want evidence of it look right there. This is a club in which you are not invited, sadly.
Alex: Okay, so before we get to Careem, I want to throw out some other stuff, because people talk a lot about Uber not just as a ride hailing platform, but also as a mobility platform for all sorts of things. So Uber Freight, part of the business that I had forgotten about, has 359 million of gross bookings for 2018. So, compared to Uber 45 billion or whatever it was, in total gross bookings, it’s not a lot of money, but to have generated 359 million in total platform spend for the freight business is material, because it’s still a lot of money, if it’s not quite Uber scale money. And I think that’s worth pointing out. And then I was pulling numbers … Uber had, I think it was, yes … they had 7.9 billion of Uber Eats gross bookings for the year ended December 31, 2018. 2.6 billion of that came in the 4th quarter, and that’s a lot of burritos, but it’s an impressive stat because it shows Uber has a second business that will do over 10 billion in total platform spend this year. That’s huge.
Kate: Yeah, I mean I gotta imagine that was part of their big pitch to investors in this run up to the IPO, just the growth they’re having outside of ride hailing.
Alex: Here’s a question though, and I haven’t actually figured out the answer to this yet, so it may be a dumb question. But, we’ve pointed out that Uber’s net revenue slowed to, essentially, a crawl from Q3 to Q4. Presumably Uber Eats grew quite a lot, because we know it’s 2.6 billion out of 7.9 in Q4. Does that mean that ride hailing may have actually shrunk in Q4 compared to Q3? Like a sequential decline. I’m gonna look at the numbers more-
Kate: Sequential decline in revenues, sequential decline in gross bookings or what?
Alex: Sequential decline in net revenue from ride hailing in particular, because revenue was essentially flat. Uber Eats went up materially, and that means that ride hailing probably went down.
Kate: Yeah, I mean it’s highly possible, but you have to look at all the other business that are running within like I don’t … where their spending’s going autonomous vehicles, freight, like I don’t know. But that’s possible. I would say leaning toward unlikely.
Alex: Leaning toward unlikely. Well our predictions tend to be wrong on the show so I’m gonna go with Kate’s view of that one, because I’m probably the most over my ski’s a little bit. But, Kate can you tell us about Careem?
Kate: Yeah, so we thought this was interesting. It does take note in the S-1 that there’s a possibility that Uber’s acquisition of Careem will not close. This is however, in the risk factor summary which is the part of S-1 where the company basically is like, “Here’s all the reasons why we might fail, and why we really suck, but like actually these are all extremely unlikely scenarios.” So, Uber’s acquisition of Careem is in the process of closing right now, but I think they have to be clear that they can’t foresee the future, so there’s a possibility it won’t close, and in which case that would stunt Uber’s growth, because Uber acquired Careem in a deal that was just essentially Uber purchasing growth in the Middle Eastern market where they don’t operate a ride hailing business at all.
Alex: I mean Uber really wants to have exposure to the entire world-
Kate: Clearly.
Alex: -and they are not gonna stop until they have … I mean, they want to be a world dominating company, they want to lead the world in ride hailing, either through minority stakes, majority stakes, of their own business itself. Its’ all very audacious.
Alex: I think I want to talk about adjusted losses really quick, and then we’re gonna talk about complexity, and then we’re gonna leave you alone, that’s the plan for this show. So, if you are following along at home, roll with me to page 90 in your S-1 document. If you’re still scrolling that’s because I am too. Welcome to live taping. At the bottom of that page there’s a note called adjusted EBITDA. Now, EBITDA, if you don’t know, stands before earnings before interest, taxes, depreciation, and aromatization, it is an adjusted metric. When you see adjusted EBITDA it mean that’s its EBITDA with even more adjustments. This is a metric that a lot of companies that are unprofitable use to show adjusted profitability. This is a number you’ll see quoted a lot in the media. I think the TIMES used this as their Uber profit number.
Alex: But in 2016, Uber’s adjusted EBITDA was -2.5 billion dollars. That rose ever so slightly to -2.6 billion in 2017, but shrunk materially to -1.85 billion in 2018. So, you can say that Uber’s revenue went up as did its gross profit, and it’s adjusted EBITDA has shown some improvement over time. It’s just not amazing. It’s still a massive loss, it’s double Lyft’s net loss in 2018, and I’m curious to see how investors decide how to weight it, because Uber has traditionally been a growth play as we said earlier, which is why loss’s matter less. But its growth is slowing as it matures, and it’s still putting up some relatively sticky deficits.
Kate: Do you have a prediction of what Uber’s share price will be?
Alex: Yeah whatever I say the opposite will happen, so-
Kate: Let’s just make a prediction.
Alex: Do I say the opposite of what I think so that it does happen, so that I was actually originally correct, or?
Kate: No, that wouldn’t make you originally correct.
Alex: But I would know that I was right in my mind.
Kate: Well, Lyft price at $74 per share, what do we think … that’s a really tough-
Alex: You have to articulate the question before I can answer it.
Kate: What do we think Uber will price its share at? Price its share out when it IPOs?
Alex: Oh that’s just a random number generator. What was its last for share private price?
Kate: I’d have to Google that and I’m not gonna make our audience wait for that. So, maybe we’ll follow up on that.
Alex: I guarantee it will be a very interesting number that we will talk about on Equity at a future date.
Kate: Fine.
Alex: Fine.
Alex: And to close us off Kate, you found this S-1 to be, as I did, complex and it … messy.
Kate: Disgusting, ugly, gross.
Alex: Tell me why?
Kate: I mean I just clicked on my favorite little button, which is, “Select consolidated financial data,” and there was just this massively ugly table full of a lot of numbers. And as you guys heard me struggle to even read the net loss metrics, just because I was confused to see profits, especially from Uber. But, as we’ve clarified those are not really profits. This is just not a … what did you say when we first started tapping? It’s like a …
Alex: It’s not a clean S-1-
Kate: No I mean-
Alex: -there’s just so much going here.
Kate: It’s not clean at all. It’s like when you look at cap tables that are just so unorganized and you’re like, “Oh my god, that’s my nightmare,” this is a nightmare to me. The Zoom S-1 was much better.
Alex: The Zoom S-1 was so simple.
Kate: Clean, beautiful, profitable; it was great.
Alex: We’re such S-1 elitists on this show. Uber’s not good enough for us with their piddly 100 billion dollar evaluation. How dare they not have a cleaner document. I am a man of ledger and I will not be bothered with minutiae.
Kate: Alright.
Alex: Anyway, I think we should call it. I think everyone’s gonna need some time to digest. We will have more posts up and more tweets and …
Kate: We’ll be talking about this until they go public, which I think is gonna be the first weekish of May. I’m not predicting that, just what I heard, first week of May.
Alex: I heard a prediction, so.
Kate: Yeah. So for the next month we’ll be talking about this, we’ll continue to unpack this filing as Alex and I actually get a chance to read the entire document.
Alex: To fully digest all 6477 pages of it. That’s sarcasm, it’s not actually that long.
Kate: I was like, “Oh my god.”
Alex: It’s a couple hundred. It’s essentially as long as the Mueller report but you can read this one.
Alex: Alright, that’s Equity Shot. Kate, thank you as always for leading us-
Kate: Thanks.
Alex: -and we’ll see you all real soon.
Alex: Bye.
Kate: Bye.
