Newsletter
Uber is a multinational transportation network company based in California, available in over 300 cities around the world. Since its foundation in 2009, the application has grown at an exponential rate, becoming the world’s most popular transportation app and motivating other companies to release their own Uber-esque services, a recent trend that has come to be known as “Uberification”. Unfortunately, Uber has been the target of many lawsuits and governmental investigations, due to a general allegation about the company’s drivers not being licensed to drive taxicabs, and for being quite shady about their way of doing business. But despite all the problems that Uber has to face, it is an apparent financial success. But the question still remains, how exactly does Uber make that much money? It now seems the answer to that long-time question has been revealed, as several internal documents were obtained by Gawker, and the answer is rather shocking, according to the documents, Uber isn’t actually making any revenue, and in fact has lost more than a few tens of millions of dollars
Uber’s CEO, Travis Kalanick has always mentioned how Uber’s revenue is increasing in an exponential rate, comments such as “whenever I have a bad day, I just look at our overall revenue graph”, which was made by Kalanick in a conference, are a common occurrence. But today, these claims have been denied by the newly leaked documents, as an unaudited revenue and expense breakdown showed that the company’s net revenue actually increased significantly until 2013, when it decreased enormously and lost over $56 million. Following that, the number grew even more, reaching to more than $160 million by the end of the first half of 2014. Another document showcasing quarterly profits and losses for 2012 and 2013, confirms that the revenue and expense breakdown was not an isolated event, as the growth in revenue was quickly followed by a rather harsh and constant drop. Uber lost around $8.1 million in total until mid-2013, which is more than enough to lead a normal company to bankruptcy.
But despite these extreme losses, the world still perceives Uber as a highly profitable company, all thanks to the amazing expansion of the app to number of countries around the world, and will continue to do so. People rely everyday more on Uber’s services, which means that people will not stop using them any day soon, but if the company wants to survive and regain the true profitability it once had, it surely has to change its business model drastically.
