There’s a lot riding on India, reveals Uber’s IPO filing

Kenny Grant
April 15, 2019

As ride-hailing major Uber filed its initial public offering (IPO) prospectus on Friday, India has been listed as its fifth largest market outside the USA in terms of total miles of rides covered (30 million miles).

The document gave the first comprehensive financial picture of the decade-old company which was started after its founders struggled to get a cab on a snowy night and has changed the way much of the world travels.

The move comes after a lackluster market debut for Uber's USA rival Lyft, which has lost more than 10 percent of its value since its IPO last month. The company will have to increase its revenue and decrease its expenses to achieve profitability in many markets, including the U.S., the company says in its document.

Uber is the largest of the "unicorns" or venture backed firms worth at least $1 billion to list on Wall Street, and is one of the key companies in the "sharing economy" which is based on offering services to replace ownership of cars, homes and other commodities.

As Uber continue to prioritise growth over profits, the ride-hailing giant's revenue has plateaued.

Uber had not disclosed the latest user numbers before, and the figure indicates the scale of the business.

In 2017, Uber's revenue stood at $7.9 billion, up ~106% YoY, and it rose to $11.3 billion in 2018, a rise of ~42%.

In 2018, Uber set aside $1.1bn to meet penalties and settlements.

Uber would be the largest initial public offering since that of Chinese e-commerce company Alibaba Group Holding Ltd in 2014, which raised $25 billion.

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After making the public filing, Uber will start a series of investor presentations, called a roadshow, which according to the Reuters will start the week of April 29. This will return before executives head out on a so-called street series created to drum up interest in the IPO among institutional investors that will be given the first opportunity to buy the inventory before it starts trading on the New York Stock Exchange.

But immediately after submitting an application for an IPO, many people had questions about how stable the Uber business is. Last year, its revenue rose 42 per cent to US$11.3 billion from a year earlier. The crash was a huge setback for Uber and the entire industry, and has led to growing skepticism about the predictions about self-driving cars.

Uber revealed in the filing it could have to pay a license fee to Waymo or face a substantial delay to the development of its self-driving technology if the initial assessment of its technology by an independent expert is confirmed. Uber says it spent $457 million in 2018 on its various futuristic projects, including autonomous vehicles and flying cars.

Uber is offering a look for its anticipated debut in the stock market in the lead-up. Analysts consider building scale crucial for Uber's business model to become profitable. Now it'll be up Dara Khosrowshahi, to Kalanick's successor, to convince investors who Uber has cleaned up its act and merits a market value higher than Ford Motor and General Motors combined.

Those have included sexual harassment allegations, a massive data breach that was concealed from regulators, use of illicit software to evade authorities and allegations of bribery overseas.

Travis Kalanick, the former CEO who stepped under stress in 2017 in the board, is one of Uber's biggest shareholders, owning nearly 9% of the company's stock.

If, as a result of legislation or judicial decisions, we are required to classify Drivers as employees (or as workers or quasi-employees where those statuses exist), we would incur significant additional expenses for compensating Drivers, potentially including expenses associated with the application of wage and hour laws (including minimum wage, overtime, and meal and rest period requirements), employee benefits, social security contributions, taxes, and penalties.

Rostan added that both firms will be seeking to step up growth and that "i it turns into a market share fight between Uber and Lyft, profitability is going to be tough".

Uber is reserving some shares in the IPO for drivers who have completed 2,500 trips among other criteria. The company claims more than 65 percent market share in the United States and Canada, versus Lyft's stated 39 percent in the United States.

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