Really, $500 million?

Uber’s raking in money in SF, but the story is complicated

Uber is now on a pace to make $500 million a year in revenue in the San Francisco market alone, according to CEO Travis Kalanick. Kalanick spoke on the matter over the weekend at a conference in Munich, and Business Insider reported the news Monday, making the argument that Uber is far larger than the taxi industry, which Kalanick claims only brings in $140 million a year in SF. I’ve reached out to the SFMTA to confirm that number and will update this if I hear back.

Prior to today, the most recent SF revenue stats from Uber surfaced last November, also via Business Insider. At that point, the leaked Uber presentation showed the company’s run rate in SF was $212.4 million based on its December 2013 revenue. Roughly a year later, it’s at $500 million — so the company has doubled in size in the city.

Originally, there was a significant, missing piece of information from Kalanick’s remarks. As Kevin Roose pointed out on Twitter, Kalanick didn’t explain whether $500 million includes the money Uber has to pay drivers.

The company later told me that it does. Uber takes a roughly 20 percent cut of each transaction, giving the rest of the money to its independent driving partners. Including the full booking fee in its revenue statistics is the difference between gross revenue (all money transacted) and net revenue (considering certain basic deductions).

Uber is touting its gross revenue to demonstrate its size, but some have questioned whether that number accurately represents the size of Uber’s business. $100 million — Uber’s cut after it pays out drivers — is a far cry from $500 million, after all.

For the time being, Uber can’t markedly shrink the cut drivers are taking, so its real business is arguably its 20 percent cut, not the full amount of booking revenue. Either way, the stats show the company is still growing at a rapid, staggering rate.

 

This story has been updated to include Uber’s confirmation that $500 million is its gross yearly revenue in SF, not net yearly revenue.

11 Responses to “Uber’s raking in money in SF, but the story is complicated”

  1. I tell you how they got there. They stole value out of drivers’ cars and exploited their labor. Simple as that. Unfortunately, most of the drivers are uneducate and only see that they made x amount in fares and don’t calculate in their entire cost of running their car for Uber. Uber exploited this ignorance and led them to believe lower fares means more pay for them, forcing them to put in 80 hours a week to make payments on that brand new car they took out from the dealer for Uber.

    Bill Gates and Richard Branson should take a note here if they want to make the world a better place. It starts with crushing companies like Uber. Create a legitimate competition to Uber, bankroll it and bring Uber to its knees.

  2. Charles Rathbone

    I wish the press was not so quick to accept unverified numbers from Uber. “According to Uber” is treated as if it is the gospel truth. More likely it is baloney served up to panicky investors.

  3. We are so very happy that uber is getting rich off the hard work it’s drivers are doing. While they still cut prices for us where we are making minimum wage. I can go anywhere now and make this kind of money. It’s not worth it anymore.

  4. Omer Dror

    Uber doesn’t keep 20%. Both Uber and Lyft incentivize drivers to put in max hours by having a decreasing revenue share. VERY few drivers actually pay 20%. I forget the breakdown but after a few hours the split goes to 85/15 (fully retroactive for all money earned that period) and then continues to 90/10 and full 100% driver pay. There’s no way Uber averages more than 10-15%.

    The truth is all the ride sharing companies are a temporary (less than 10 year) business. I’m shocked the valuations don’t account for that. Self driving cars will be available in 5-8 years. Rather than increase the margins for these companies it will make them a commodity provider. Much of the map vehicle optimization software won’t be necessary. Once there’s no drivers, choosing a car to use just comes down to the model and price. Every person can make their car available with the price per hour they want and place the same car on multiple platforms. In fact a start up could make a single open source database with app that pulls all available cars from all services and quotes a price based on total time which already accounts for how far away each car is. That api could be integrated into any app. Uber could buy their own driverless cars but they won’t get excessive economic rent for them because there’s no barrier to entry and buying many cars gives no scale advantage. You could argue a return for developing a relationship with vendors for a delivery service but again the actual delivery portion can use anyone’s driverless car.

    • BellicheckCheats

      What are you talking about? UBer takes 20-25% period. That may be a temp. promo in your market but for 95% of the USA Uber takes either 20 or 25%. As far as the driverless car thing goes Ubers has been involved with Google now for a couple of years already. Its going to UBer + google cars + Waze app.

      • Omer Dror

        I agree… Bellicheck does cheat! As for revenue share, I was referring specifically to San Francisco. Every Lyft and Uber driver I’ve used there mentioned the split increase based on time and none of them were paying 20%.

        I am well aware that Uber was funded early on by Google so they are very cognizant to the driverless car developments. And they will probably be an early test bed for the technology. The problem is that every global manufacturer will be making driverless cars so there is no competitive advantage for Uber. Anyone buying a driverless car and placing it in service would expect the same rate of return as Uber thus driving down that rate of return to a very low fair economic rent (think 4-6%). It would be near impossible in that scenario for Uber to maintain a 11 figure market cap.

    • That is why they are so greedy now. They have to make the money before technology puts them out of business. I just heard that Japan is preparing for their future by jumping to the latest hydrogen fuel vehicles. If SFMTA is buying future “clean” diesel buses they are already behind the curve. In fact, if they are buying electric they are behind.

  5. $500 Million is what Uber makes. Add whatever $100- Million from Lyft and other/sidecars, it’s already way more than Taxi industry. And of course this means the Uber/Lyft/Sidecar drivers are making way more money than Taxi drivers in the area.

  6. Ian Littman

    Gross revenue is an accurate picture of how they’re doing in a market. Just like in any other business, transaction volume may not be tied to what your margin is…and that’s fine.

    Also, Uber’s cut is plenty big enough at this point; no need to worry that the poor company will “only” pull in $100MM from fares on its system.

  7. Wesley Barnett

    Usually companies and markets are measured in gross revenues. Certainly Uber has a gross margin less than 100%, as all companies do (probably around the 15% after passing on fares and paying incentives). But the taxi industry is no different.

    The question is, is uber really doing over 3x the business of taxis in SF? Since I could never hail a cab in SF, it seems reasonable.

  8. kaldenbaugh

    In general, the way the startup/Silicon Valley market works is: If talking to a reporter, use the largest, most-inflated revenue number possible. I guarantee this number is a gross revenue number that includes the economics for drivers.