TRANSPORT-UBER/CHALLENGES

(Reuters)

Leaked Documents Show Uber’s Cost Structure, Best-Performing Cities

By Mobile FOXBusiness

FOXBusiness.com has obtained leaked documents that Uber is using to persuade investors to participate in its Uber China financing.  The global ride-sharing company is close to finalizing a round of at least $1 billion that would value Uber China at more than $7 billion, according to a source with direct knowledge of the matter.

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FOXBusiness.com has also learned that the company is telling potential investors that Uber China will be spun off as a separate business that could IPO before Uber. 

The documents show that Uber’s “net present value,” a projection of cash flows, is $4.9 billion in Shanghai, $2.2 billion in Guangzhou and $1.8 billion in Shenzhen.

While Uber is the dominant car service app in the United States, it has a lesser market share in China, due to competition from services like Didi Kuadi.

Uber is also showcasing its “contribution margin” in various cities, a measurement of each region's profitability. The company’s “contribution margin” is at 11.1% in Stockholm and Johannesburg and 10.1% in San Francisco. Other top cities include London, Charleston, Melbourne, Washington DC and New York. The breakdown shows that Uber pays roughly 80% of what it generates from gross bookings in driver commissions. 

Uber is the world’s most valuable startup with a $50 billion valuation. Its long list of investors include Google Ventures (GOOGL), Blackrock (BLK) and Goldman Sachs (GS).

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Uber declined to comment.

Below are the specific data points obtained by FOXBusiness.com and given to the company's investors. 

Document 1: City Profitability (Mar-2015)

Selected Cities                            Contribution Margin

Stockholm                                                  11.1%

Johannesburg                                              11.1%

San Francisco                                             10.1%

London                                                        9.7%

Charleston                                                   9.5%

Melbourne                                                   9.3%

Washington DC                                           9.3%

New York                                                    9.2%

Boston                                                         9.1%

Paris                                                            8.7%

Chicago                                                       7.0%

Sydney                                                        6.4%

Atlanta                                                         5.4%

Mexico City                                                 4.9%

Miami                                                          4.4%

Baltimore                                                     4.1%

Minneapolis                                                 4.1%

Houston                                                       4.1%

Phoenix                                                       3.8%

Seattle                                                         3.5%

Note: margins adjusted for uberPOOL promotions

Document 2: Selected City NPVs

Selected City NPVs (net present value)

Shanghai

NPV: $4.9bn

Guangzhou

NPV: $2.2bn

Shenzhen

NPV: $1.8bn

Document 3: City Contribution Margins

San Francisco         Today

Gross Bookings       100%

Driver Commission    (78.1)%

Safe Rides Fee          5.0%

Driver Incentives        (1.4%)

Returns                    (0.4%)

Net Revenue           25.1%

 

Payment Fees           (2.4)%

Mobile (Net)               (0.2)%

Network                    (0.3)%

Other COGS             (1.9)%

Sales & Marketing     (2.9)%

Insurance                 (3.5)%

Other Opex               (3.8)%

Contribution Margin    10.1%

 

London                    Today

Gross Bookings       100%

Driver Commission    (80.0)%

Safe Rides Fee          0.0%

Driver Incentives       (1.6%)

Returns                    (0.8%)

Net Revenue            17.6%

Payment Fees           (1.5) %

Mobile (Net)               (1.0) %

Network                    (0.2)%

Other COGS             (0.6)%

Sales & Marketing     (3.5)%

Insurance                  (0)%

Other Opex               (1.1)%

 

Contribution Margin 9.7%

 

Shanghai                 Launch

Gross Bookings       100%

Driver Commission    (80.0)%

Safe Rides Fee          0.0%

Driver Incentives       (138.8)%

Returns                    (0.3%)

Net Revenue            (119.2%)

 

Payment Fees           (1.0) %

Mobile (Net)               (5.6) %

Network                    (0.8)%

Other COGS             (1.2)%

Sales & Marketing     (15.3)%

Insurance                  (7.0)%

Other Opex               (7.6)%

Contribution Margin (157.6%)

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