Uber needs to thread the needle on bookings, take rate, and expenses

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Uber ( UBER ) will start its first day as a public company with a cash balance of about $15 billion. At its current burn rate, that gives it about 6 years to become cash flow positive. Uber's long-term success hinges on its ability to continue adding billions to gross bookings ($50 billion in 2018), while  raising its revenue take rate (21% in 2018), and dialing back sales and marketing spend (28% of revenue).

S&M spend has led to strong growth in bookings, which reached $14.2 billion in the fourth quarter (+37% y/y). 

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Meanwhile, Uber's take rate has come under pressure in recent quarters due to intense competition from Lyft; Ridesharing adjusted take rate peaked at 23% in the 1Q18, but is expected to be 20% in the 1Q19. In addition, Uber Eats has grown bookings faster than Ridesharing, and Eats has a much lower take rate, largely because of payments Uber makes to encourage more Eats drivers. So while combined gross bookings from Ridesharing and Eats grew 21% from the 2Q18 to the 1Q19, their adjusted revenue grew just 2.8% during the same period, remaining at about $2.5 billion. 

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More Renaissance commentary on Uber:
Uber prices $8 billion IPO at $45, toward the low end of the range
Ride or die: Uber vs. Lyft
Cash guzzler 2: Uber is losing more money than any IPO ever

The article Uber needs to thread the needle on bookings, take rate, and expenses originally appeared on IPO investment manager Renaissance Capital's web site renaissancecapital.com.

Investment Disclosure: The information and opinions expressed herein were prepared by Renaissance Capital's research analysts and do not constitute an offer to buy or sell any security. Renaissance Capital's Renaissance IPO ETF (symbol: IPO) , Renaissance International ETF (symbol: IPOS) , or separately managed institutional accounts may have investments in securities of companies mentioned.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: News Headlines , IPOs
Referenced Symbols: UBER

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