Healthier Contribution, Weaker Take Rate - Two Different Metrics, Two Different Stories
This is Uber's first quarterly report filed entirely as a public company - the Q1 2019 10-Q, covered here, was filed after the May 10, 2019 listing but covered a quarter that ended before it. This one covers the three months ended June 30, 2019, the quarter that actually contained the IPO itself, and it shows the accounting mechanics of going public landing on the income statement in full force.
The headline number is brutal: net loss attributable to Uber of $5,236 million, versus a $878 million loss in the same quarter a year earlier - roughly six times wider. But almost all of that swing is a single, well-disclosed, non-cash item: the IPO's effectiveness triggered $3.6 billion of stock-based compensation expense on Restricted Stock Units» (RSUs) that had a performance condition (an IPO or acquisition) attached, sitting dormant on the books until the exact moment the SEC declared the registration statement effective. Add a further $86 million of payroll tax tied to that same event and a $299 million cash "Driver appreciation award" paid to qualifying drivers around the IPO, and total costs and expenses jumped 147% YoY to $8.65 billion versus 14% revenue growth to $3.17 billion. This is not a surprise finding - management flagged all three items explicitly, in the earnings deck's own non-GAAP reconciliation and on the call - but a reader skimming the GAAP loss line alone would come away thinking the underlying business fell off a cliff this quarter. It didn't.
Strip those one-time items out and a genuinely more interesting - and more mixed - story emerges. Core Platform» Contribution Margin, which collapsed to -4.5% last quarter, rebounded to +8.2% this quarter - a real, sequential recovery in Core Platform's direct-cost economics, driven by more disciplined incentive deployment and a mix shift toward higher-margin UberX rides over pooled/discounted products, per management's own account. Adjusted EBITDA» loss of $656 million also improved sequentially from Q1's $869 million loss, the first quarter-over-quarter improvement after four straight quarters of widening losses (see the trailing-quarter detail under Key Financial Metrics below). By a narrow, backward-looking measure, Q2 looks like the quarter the deterioration flagged in the last post started to reverse.
But look at a different ratio and the story flips: Core Platform Take Rate» - the share of Gross Bookings» Uber actually converts into Adjusted Net Revenue - fell further, from 21% to 17%. Contribution Margin and Take Rate answer different questions: Margin asks "of the revenue Uber keeps, how much survives direct costs?" while Take Rate asks "of the money moving through the platform, how much does Uber keep in the first place?" Both can move in opposite directions at once, and this quarter they did - Uber got better at converting a shrinking share of Gross Bookings into profit. The shrinking share itself is structural: Uber Eats, which runs at a meaningfully lower take rate than Ridesharing, kept growing faster (Uber Eats Gross Bookings up 91% YoY to $3,386 million versus Ridesharing's 20% to $12,188 million) and now makes up a larger slice of the Core Platform mix than a year ago.
The clearest sign of where the real pressure sits: Ridesharing revenue grew just 2% YoY, to $2,348 million from $2,291 million - a near-complete stall in the segment that still generates most of Core Platform's dollars, driven by the Driver appreciation award being classified as a Driver incentive (reducing net revenue) and by continued incentive spend against Lyft and regional competitors. Uber Eats revenue, by contrast, grew 72% to $595 million. The pattern already flagged last quarter - Eats as the clear growth engine while Ridesharing decelerates - has only sharpened.
The Prescription
Uber should keep pushing exactly the discipline that produced this quarter's Contribution Margin rebound - mix shift toward higher-margin UberX volume over discount-heavy pooled rides, and more surgical (rather than blanket) incentive deployment - and extend it deliberately to Uber Eats, which is still the segment absorbing the bulk of the take-rate compression. The company already proved with Core Platform that a deliberately worse headline number (Take Rate, Gross Bookings mix) can coexist with a genuinely improving one (Contribution Margin) if incentive spend is targeted well; the same playbook applied to Eats - which management itself frames as still in land-grab mode - is the more defensible way to keep both funding growth and narrowing losses, rather than treating Eats subsidy intensity as untouchable while Ridesharing absorbs all the discipline.
What it should stop doing: layering pro forma, IPO-specific adjustments onto an already crowded non-GAAP reporting stack without a correspondingly sharp explanation of what's structural versus one-time. This quarter alone required backing out a $3.6 billion RSU charge, an $86 million payroll tax, and a $299 million driver bonus just to see the real trend - three separate, IPO-specific add-backs in a single quarter, on top of the pre-existing Adjusted Net Revenue and Adjusted EBITDA adjustments the company already made before going public. Each adjustment is individually defensible and fully disclosed, but the cumulative effect is a reporting package where a reader has to do real work to find the two numbers that actually matter (Core Platform Contribution Margin and Take Rate) underneath four layers of one-time items. A public company reporting its first quarter of results owes its new shareholders a cleaner bridge between the IPO-noise-adjusted numbers and the two or three metrics that will still matter a year from now.
Key Financial Metrics
Three months ended June 30, 2019 vs. three months ended June 30, 2018 - reported in USD, no FX conversion needed
| Metric | Q2 2019 | Q2 2018 | YoY |
|---|---|---|---|
| Gross Bookings | $15,756M | $12,012M | ✅ +31% (+37% constant currency) |
| Revenue | $3,166M | $2,768M | ⚠️ +14% (trails Gross Bookings growth) |
| Adjusted Net Revenue | $2,873M | $2,574M | ⚠️ +12% (+26% constant currency, excluding Driver appreciation award) |
| Total costs and expenses | $8,651M | $3,507M | ⚠️ +147% (stock-based compensation expense alone rose from $20M to $3,941M) |
| Loss from operations | $(5,485)M | $(739)M | ⚠️ Loss ~7.4x wider |
| Net loss attributable to Uber | $(5,236)M | $(878)M | ⚠️ Loss ~6.0x wider (almost entirely IPO stock-comp) |
| Diluted EPS | $(4.72) | $(2.01) | ⚠️ Not comparable - swamped by IPO stock-comp charge |
| Adjusted EBITDA» | $(656)M | $(292)M | ⚠️ +125% wider YoY, but ✅ improved from Q1 2019's $(869)M |
| Core Platform Contribution» (Profit) | $220M | $369M | ⚠️ Margin 8.2% vs 14.7% YoY, but ✅ rebounded from -4.5% in Q1 2019 |
| Other Bets Contribution (Loss) | $(122)M | $(28)M | ⚠️ Loss ~4.4x wider |
| Net cash used in operating activities (derived, standalone quarter) | $(922)M | $(153)M | ⚠️ ~6x wider |
| Free cash flow (derived, standalone quarter) | $(1,070)M | $(272)M | ⚠️ ~3.9x wider |
| Cash and cash equivalents | $11,744M | n/a (Dec 2018: $6,406M) | ✅ +83% vs Dec 2018, boosted by IPO proceeds |
Standalone Q2 operating cash flow and capex are derived by subtracting the already-published Q1 2019 figures (from the prior post) from this filing's six-month cumulative totals, since Uber does not disclose quarterly cash flow figures on a standalone basis.
| Balance sheet | Jun 30, 2019 | Dec 31, 2018 | Change |
|---|---|---|---|
| Total assets | $30,980M | $23,988M | ✅ +29.2% |
| Total liabilities | $15,072M | $17,196M | ✅ -12.3% |
| Redeemable convertible preferred stock | $0 | $14,177M | Converted to common stock upon IPO |
| Total stockholders' equity (deficit) | $15,922M | $(7,385)M | ✅ Swung positive by ~$23.3B |
| Total debt (gross) | $4,603M | $7,491M | ✅ -38.6% (2021/2022 Convertible Notes converted to equity upon IPO) |
Uber's own trailing-quarter disclosure shows the sequence clearly: Adjusted Net Revenue has grown every quarter since Q2 2017 - $1,630M, $1,982M, $2,282M, $2,423M, $2,574M, $2,656M, $2,644M, $2,761M, then $2,873M this quarter - a steady, if decelerating, climb. Adjusted EBITDA losses, by contrast, widened every single quarter from Q1 2018 through Q1 2019 ($(280)M to $(869)M, after narrowing in the three quarters before that) before this quarter's improvement to $(656)M - the first sequential improvement in that full four-quarter widening streak. Whether that's the start of a durable trend or a one-quarter beat against an easy internal plan (as management characterized it on the call) is the real open question this data leaves for next quarter to answer.
Key Operational Metrics
Two operating and reportable segments: Core Platform (Ridesharing + Uber Eats) and Other Bets (Freight + New Mobility)
| Metric | Q2 2019 | Q2 2018 | YoY |
|---|---|---|---|
| Monthly Active Platform Consumers» (MAPCs) | 99M | 76M | ✅ +30% |
| Trips | 1,677M | 1,242M | ✅ +35% |
| Gross Bookings - Ridesharing | $12,188M | $10,166M | ✅ +20% |
| Gross Bookings - Uber Eats | $3,386M | $1,774M | ✅ +91% |
| Gross Bookings - Other Bets | $182M | $72M | ✅ +153% |
| Core Platform Take Rate | 17% | 21% | ⚠️ -4 pts |
MAPCs passed 100 million in June 2019, per management's own disclosure on the call - a milestone reached one month after this quarter's period end, mentioned here only because management chose to disclose it themselves as a forward-looking data point, not because it's a fact from a later period being retrofitted into this quarter's numbers.
Segment Results
Uber still reports the same two segments as last quarter: Core Platform (Ridesharing plus Uber Eats, over 93% of revenue) and Other Bets (Freight plus New Mobility bikes/scooters). Management disclosed in this filing that a June 2019 leadership reorganization may change how segments are reported starting Q3 2019 - so this is likely the last quarter reported under this exact two-segment structure.
Core Platform
Core Platform Adjusted Net Revenue grew 7% YoY to $2,678 million, a further deceleration from Q1 2019's already-slower 10% pace. Contribution Margin rebounded sharply from Q1's -4.5% to +8.2% - still below the 14.7% posted a year earlier, but a real sequential recovery management attributed to more effective incentive targeting and a mix shift toward higher-margin UberX rides over discounted pooled products. Within the segment, Ridesharing revenue grew only 2% YoY to $2,348 million (versus 9% growth in Q1 2019), while Uber Eats revenue nearly doubled again, up 72% to $595 million - Eats now clearly carries Core Platform's growth on its own, exactly the pattern flagged in the Q1 2019 post.
Other Bets
Other Bets Gross Bookings grew 153% YoY to $182 million, still a rounding error against $15.8 billion in company-wide Gross Bookings. Uber Freight continued growing despite what management called "soft market conditions" in freight brokerage generally, and New Mobility (bikes/scooters) launched in 11 new markets this quarter including Paris and Berlin, which management singled out as two of its best-performing cities so far. Segment revenue grew 175% YoY to $195 million, but the Contribution Loss widened 4.4x YoY, from $(28) million to $(122) million - fast percentage growth still being bought with a steeply rising direct-cost bill, not yet approaching the breakeven Core Platform touched briefly in 2018.
Segment Comparison
Core Platform's Contribution Margin genuinely improved sequentially (from -4.5% to +8.2%) even as its Take Rate kept falling and its largest revenue line, Ridesharing, nearly stalled at +2% YoY - a segment getting more disciplined about the revenue it keeps while keeping a shrinking share of the volume flowing through it. Other Bets is the mirror image: growing fast in percentage terms (153% Gross Bookings growth) precisely because it's still tiny, while its losses widen even faster in dollar terms. Read together, the "core" business found real, if partial, margin discipline this quarter; the "bets" haven't started looking for it yet, and on this filing's own disclosure, may not be reported the same way again after Q3 2019's organizational changes take effect.
Beyond the Usual
The bookings/revenue gap flagged last quarter narrowed, but Take Rate is this quarter's real story
As flagged last quarter, Gross Bookings keeps outgrowing the revenue Uber actually keeps - up 31% YoY this quarter (37% at constant currency) against 14% GAAP revenue growth and 12% Adjusted Net Revenue growth - though that gap narrowed from Q1's spread. What's actually new this quarter is Core Platform Take Rate falling further, from 21% to 17% (see above); a reader anchoring on the CEO's "$63 billion annual run rate" framing would come away with a rosier read on monetization than the Take Rate data supports.
Legal and regulatory accruals grew 45% in six months, to $1.6 billion
The 10-Q discloses that aggregate accrued liabilities for legal, regulatory, and non-income tax matters considered "probable and reasonably estimable" grew from $1.1 billion at December 31, 2018 to $1.6 billion at June 30, 2019 - a $500 million increase in two quarters, on top of the already-disclosed contingent exposures (the UK Aslam worker-classification appeal, the Levandowski arbitration award) that remain unquantified and sit outside this accrual entirely. The filing doesn't break out what drove the increase across specific matters, so a reader can see the number moved materially without being able to attribute it to a specific cause.
A new $146-170 million settlement with US drivers over worker classification
In May 2019, Uber reached agreements to resolve independent-contractor misclassification claims brought or threatened by drivers in California and Massachusetts through individual arbitration demands - separate from the already-settled O'Connor/Yucesoy class actions (settled for $20 million in March 2019). The company estimates the aggregate cost of these individual settlements, including attorneys' fees, will fall between $146 million and $170 million, contingent on enough covered drivers actually signing individual settlement agreements. This is new information this quarter, not a restatement of the O'Connor/Yucesoy settlement already known - it's a materially larger, separate resolution of the same underlying legal theory.
Four smaller footnote items worth a quick note
SoftBank, Toyota, and DENSO's April 2019 agreement to invest $1.0 billion into a newly formed parent entity for Uber's self-driving unit (Advanced Technologies Group), for roughly 14% on a fully diluted basis, implies a standalone ATG valuation of about $7.1 billion - a real, market-set number for a segment that otherwise generates no revenue of its own. Separately, PayPal closed a $500 million private placement on May 16, 2019, buying 11 million shares at the $45.00 IPO price and extending its existing commercial partnership with Uber. Upon the IPO closing, holders of Uber's 2021 and 2022 Convertible Notes converted their entire balance into common stock, producing a net $327 million gain in Other income - a one-time capital-structure event, not an operating result. And Uber's Southeast Asian Grab stake, received when Uber sold its Southeast Asia operations to Grab in 2018, is carried in the fair-value footnote as a $2,334 million debt security rather than equity - a different classification than the Didi stake already covered last quarter.
The $299 million Driver appreciation award quietly depresses this quarter's growth optics
Uber paid a $299 million cash bonus to qualifying drivers in April 2019 tied to the IPO, and accounted for it as a Driver incentive - meaning it reduces both revenue and Adjusted Net Revenue rather than appearing as a separate marketing or compensation line. Management's own preferred read excludes it: Adjusted Net Revenue growth was 12% including the award but management cited 26% constant-currency growth excluding it. Both framings are disclosed, but a reader who only sees the headline 12% figure is seeing a number depressed by a one-time driver bonus tied to the same IPO event already inflating the expense side of the income statement.
Management's Framing: A Sequential Beat, and the First Public Guidance
On the earnings call - Uber's first as a reporting public company - both the CEO and CFO framed Q2 as beating the company's own internal plan, attributing the Adjusted EBITDA improvement to genuine execution rather than a weaker prior-quarter comparison, and the CFO went further, stating that if Core Platform's contribution profit were charged only its own segment's overhead (excluding ATG spend entirely), the rides-and-Eats business would have posted an operating loss of only about $100 million for the quarter - management's own framing of how close the "real" core business is to profitability once ATG's self-driving investment is stripped out. The company also issued its first full-year guidance as a public company: 2019 Gross Bookings growth of 31-35% at constant currency (translating to $65-67 billion), and 2019 Adjusted EBITDA loss of $3.0-3.2 billion, alongside forward guidance on Q3 stock-based compensation ($450-500 million) and share count. Notably, as in the prior quarter, litigation was never mentioned once in either prepared remarks or analyst Q&A - neither the pending UK Aslam appeal nor the Levandowski arbitration came up on a call otherwise dedicated to growth, competitive positioning, and the newly announced guidance (see Beyond the Usual above).
Target Valuation Range
Bear-to-bull range of roughly $39-55 per share (~$66-94 billion enterprise value), with the actual June 28, 2019 close of $46.38 sitting toward the low end of that band - too early to call a durable valuation with only two months of trading history and a P&L still dominated by one-time IPO mechanics, but the peer-multiple math below already implies a real range, not just a directional read.
Uber's stock closed June 30, 2019 within a trading month whose month-end close was $46.38 (June 28, 2019, the last trading day of the quarter) - modestly above the $45.00 IPO price.
| Market cap → enterprise value | Q2 2019 (period-end) |
|---|---|
| Share price (period-end, June 28, 2019 close) | $46.38 |
| Shares outstanding | 1,697.6 million |
| Market capitalization | ~$78.7 billion |
| Less: cash and cash equivalents | $11,744 million |
| Plus: total gross debt | $4,603 million |
| Enterprise value | ~$71.6 billion |
This is the first quarter with a public trading history to value (see Q1 2019 above for why no market-based valuation was possible last quarter), so there's no genuine prior-quarter column yet - the comparison below is against Lyft, the one directly comparable public peer, for the same reporting quarter.
| Peer-multiple sanity check (annualized Q2 2019) | Uber | Lyft |
|---|---|---|
| Annualized revenue | ~$12.7 billion (revenue) | ~$3.47 billion |
| Enterprise value | ~$71.6 billion | ~$15.9 billion |
| EV/Revenue | ~5.6x | ~4.6x |
| Annualized Adjusted Net Revenue | ~$11.5 billion | - |
| EV/Adjusted Net Revenue | ~6.2x | - |
| Ridesharing/total revenue YoY growth | 2% (Ridesharing segment) | 71.8% (total company) |
Uber trades noticeably richer than Lyft on EV/Revenue, even though Uber's largest single revenue line (Ridesharing) grew only 2% YoY this quarter versus Lyft's own 71.8% total revenue growth over the same period. Uber's premium looks more attributable to Eats optionality and overall scale than to superior Ridesharing momentum specifically - and the comparison isn't perfectly clean, since Lyft's 71.8% is total-company growth against Uber's single largest segment, not a like-for-like split.
A full multi-year DCF isn't reliable yet for a two-month-old public company (see below), but the two EV/Revenue multiples already on the table above - Uber's own actual ~5.6x and Lyft's peer ~4.6x - are enough to back into a real bear/base/bull band, applied to Uber's own ~$12.7 billion annualized revenue and converted to a per-share price the same way the market-cap buildup table above does (enterprise value plus cash, less gross debt, divided by 1,697.6 million shares outstanding):
| Scenario | Key assumption | Implied EV/Revenue | Implied enterprise value | Implied market cap | Implied price/share |
|---|---|---|---|---|---|
| Bear | Uber re-rates down to Lyft's actual multiple | ~4.6x | ~$58.4 billion | ~$65.6 billion | ~$38.6 |
| Base | Uber holds its own actual current multiple | ~5.6x | ~$71.6 billion | ~$78.7 billion | ~$46.38 |
| Bull | Uber's premium over Lyft (currently ~1.22x) widens by that same ratio again | ~6.8x | ~$86.6 billion | ~$93.7 billion | ~$55.2 |
| Current (period-end close) | Actual June 28, 2019 close | ~5.6x | ~$71.6 billion | ~$78.7 billion | $46.38 |
The Base and Current rows coincide because Base's assumption is simply "the multiple the market is already paying holds" - the actual close is the reference point, not a separate estimate. Bear and Bull aren't independent forecasts either; they're the same EV/Revenue framework stretched to the two multiples already established in this quarter's own peer comparison (Lyft's discount, and an equal-sized premium expansion beyond Uber's current one) - a sanity-check band, not a DCF-grade target.
A DCF or reverse-DCF isn't a reliable exercise yet for this quarter: Uber has only two months of public trading history, a GAAP loss dominated by non-recurring IPO items that makes any near-term cash-flow projection highly sensitive to which adjustments a reader trusts, and management's own full-year Adjusted EBITDA guidance (a $3.0-3.2 billion loss) spans a wide enough range that discounting it into a per-share value would carry more false precision than insight. The peer-multiple comparison above is the soundest tool available this quarter; a real DCF is better attempted once there's at least a full year of public reporting and a clearer signal on whether this quarter's Contribution Margin rebound is durable or a one-off beat against an easy internal plan.
Uber Technologies, Inc.'s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019, filed with the SEC; Q2 2019 earnings supplemental data presentation; Q2 2019 earnings call transcript, August 8, 2019.