We ignite opportunity by setting the world in motion, says Uber in its filing for an initial public offering with the Securities and Exchange Commission last Thursday. The 10-year-old company is ready to move to the next level by making itself available on the stock exchange. As it does so, the rideshare companys CEO, Dara Khosrowshahi, who replaced founder and ex-CEO Travis Kalanick, admits there were missteps along the way. He also commits himself to treating customers, colleagues and cities with respect, and he vows to the run the business with passion, humility and integrity.
In its S-1 filing, Uber does not specify a share price or a total investment hoped for, but it does spell out that the net proceeds of an IPO will be used for general corporate purposes which include working capital, operating expenses and capital expenditures. It may also be used to invest in businesses, products, offerings and technology, though it does not spell out what those might be. Uber did say, however, that it does not have any agreements for possible acquisitions or investments right now.
The company also says it intends to retain all investments and future earnings for the development and expansion of the business, and it does not currently have plans to pay cash dividends to investors in the near future. This is subject to change along with business conditions and its board of directors may change that policy in the future.
To appeal to potential investors, Uber shared some impressive statistics in its IPO filing:
– Uber makes 14 million trips a day.
– The company serves over 700 cities on six continents.
– Uber has three platforms (Personal Mobility, Uber Eats and Uber Freight).
– The company has 91 million monthly active platform consumers, or unique consumers who use any of the three platforms at least once in a given month.
– As of September 2018, Uber drivers had made over 10 billion trips.
– In the quarter ended December 31, 2018, 1.5 billion trips had been made on the platform.
– Since 2015, drivers have earned $78.2 billion on the platform, not including $1.2 billion in tips since July 2017.
– In 2018, gross bookings were $49.8 billion, a 45% increase from $34.4 billion in 2018.
– For the same period, revenue was $11.3 billion, a 42% increase from $7.9 billion in the prior year.
But it isnt all sunshine and roses, Recode points out. The company has had its share of challenges, including the very public ejection of founder and former-CEO Travis Kalanick two years ago, the horrific damage to the Uber brand as a result of that scandal and others, and a dramatic shift in culture to try to prove to the world that the company has changed.
Taking this step means that we have even greater responsibilities – to our shareholders, our customers and our colleagues. Thats why, over the past 18 months, we have improved our governance and Board oversight; built a stronger and more cohesive management team; and made the changes necessary to ensure our company culture rewards teamwork and encourages employees to commit for the long terms, said Khosrowshahi in a CEO letter included in the S-1 filing.
Because we are not even one percent done with our work, we will operate with an eye toward the future. We will optimize for the happiness and loyalty of our customers rather than marginal trip or transaction growth. And we will not shy away from making short-term financial sacrifices where we see clear long-term benefits, Khosrowshahi added.
Uber believes its three platforms give it a better chance for success than competitors like Lyft, who filed for an IPO last month. Its platforms include:
– Personal Mobility includes the ridesharing platform it is best known for, but also other types of vehicles including motorbikes, minibuses, taxes, ebikes and escooters. It offers a Ride Pass subscription for a monthly fee starting at $14.99.
– Uber Eats which allows customers to order meals from the Uber Eats app and have restaurant meals directly to their home or business
– Uber Freight, launched in 2017, which leverage Ubers technology, brand and experience to create an on-demand marketplace for logistics
Recode reports that Uber is expected to be valued at over $90 million and will sell an estimated $10 billion shares of stock, though those numbers are speculative. If those numbers turn out to be accurate, this IPO will be the largest US IPO since Alibabas 2014 IPO.
While the subscription portion of Ubers business is not significant, the impact of Ubers IPO is massive, just by the matter of its sheer size. Lyft, who offers an all-access subscription plan for frequent users, is expected to be valued at $20-$25 billion, significantly less than Uber. If Uber pulls off a successful IPO, it will have a sizable competitive advantage over Lyft. It will have the working capital to cover costs while also investing in additional development and acquisitions. To be successful though, Uber will need to get out of its own way first. Hopefully, under new management, it can do that and prove that it deserves to hold the dominant market position.