But while is famous for huge growth, towering revenues, and enormous fundraising, something that most don鈥檛 know is that Uber loses money. A lot of it.

So much, in fact, that its IPO timing is a question mark, its eventual valuation a mystery, and there have been nagging concerns throughout 鲍产别谤鈥檚 recent life as to whether it can ever make money. Or if it can while supporting its more exotic operations (Uber Eats loses money, self-driving cars aren鈥檛 cheap, and ?).

So, today, we鈥檙e going to explain how Uber loses money. After all, the company is famous for being asset-light. By that we mean that 鲍产别谤鈥檚 non-employee drives own their cars, and pay for their own gas, and cover most insurance costs.

If Uber isn鈥檛 operating a huge fleet of cars, how can it possibly lose money? Let鈥檚 find out.

Losses

Today we鈥檙e looking at 鲍产别谤鈥檚 second quarter 2018 numbers. If you want to follow along at home, we鈥檙e leaning on put together by the Wall Street Journal.

Why focus on the the company鈥檚 second quarter? Because we have yet to see 鲍产别谤鈥檚 third quarter figures, and the company鈥檚 first quarter was impacted by one-time corporate divestments. More simply, the money that Uber got for divesting certain operations makes its first quarter look better than it was.

So, for the second quarter, how much money did Uber lose? Let鈥檚 find out:

• 鲍产别谤鈥檚 Q2鈥�2018 adjusted EBITDA (a very relaxed profit metric that doesn’t count all costs): -$614 million.
• 鲍产别谤鈥檚 Q2鈥�2018 non-GAAP profit (the company鈥檚 net loss, not including the cost of share-based compensation): -$870 million.
• 鲍产别谤鈥檚 Q2鈥�2018 net loss (the company鈥檚 profit or loss, inclusive of all costs): -$891 million.

In 鲍产别谤鈥檚 case, the stricter the profit metric (the more costs the profit metric takes into account), the worse its quarterly loss. That makes sense!

What you should take away from the above is that no matter which profit metric we decide on, be it net loss or adjusted EBITDA, Uber loses a pile of money each quarter.

How

Now that we understand that Uber does lose money, we want to know how it manages the task.

To understand, we鈥檒l start with fares and work our way through the company鈥檚 costs. So up first? Gross bookings, or the value of all rides on 鲍产别谤鈥檚 platform. In the second quarter of 2018, 鲍产别谤鈥檚 gross bookings totaled $12 billion. That鈥檚 a lot of money!

However, Uber doesn鈥檛 get to keep most of it. In fact, a lot of things need to come out of gross bookings before we can figure out 鲍产别谤鈥檚 own revenue. The largest gross bookings cost is what Uber drivers make. In the second quarter, $8.2 billion of the $12 billion in bookings Uber pulled in went to drivers.

Uber also spent $142 million on promotions in the second quarter, paid drivers another $427 million in incentives, spent $27 million on refunds, and paid $411 million in taxes and the like. All told, according , 鲍产别谤鈥檚 $12 billion of gross bookings included $9.2 billion in so-called 鈥渃ontra-revenue鈥� expenses.

Now we can figure out 鲍产别谤鈥檚 real second quarter revenue: $12 billion (gross bookings) minus $9.2 billion (contra-revenue expenses) equals $2.8 billion in net revenue for Uber. This is the money it takes in the door, from which we鈥檒l deduct 鲍产别谤鈥檚 cost of revenue (what it costs to deliver product), its operating costs (salaries, office space), and other expenses to determine where all the money went. (Recall that we are trying to understand why Uber loses money; there is no profit at the bottom of this well.)

So Uber has $2.8 billion in Q2 revenue to spend on itself. Its cost of revenue came to $1.3 billion, leaving $1.5 billion in gross profit for the company to use to pay for its operating costs (for more on income statements, check out this post).

Are 鲍产别谤鈥檚 operating costs greater than its gross profit? Here are the ridesharing company鈥檚 costs from its business operations:

So does that chart of costs sum to more than its gross profit of $1.5 billion? Yes. 鲍产别谤鈥檚 operating costs come to a total of $2.2 billion. And as 鲍产别谤鈥檚 costs are $700 million greater than its available gross profit, it loses money.

In English, the money that Uber collects from fares isn鈥檛 enough to pay for its revenue and operating costs; therefore, Uber loses money each quarter.

How much money the company loses depends on how you count costs and if you take into account non-cash costs (such as stock compensation). But, by every possible 鈥渞eal鈥� profit metric, Uber is deeply unprofitable.

And that鈥檚 simply due to it having a higher cost base than it does revenue generating capacity. Now you know!

Editorial note: The original version of this post was more a loose series of notes. I decided to make it clearer and better. This is the improved version.

Follow Crunchbase News on

The company did just that on Wednesday afternoon this week. The bottom line? Uber continues to grow its business, but at high cost and at a slowing rate of change. Crunchbase News summarized the numbers and commentary this morning.

But like most types of data, it鈥檚 often easier to understand the situation on the ground in graphic form. So, we charted the data Uber and will present those below.1

Let鈥檚 start with 鲍产别谤鈥檚 core financial performance.

Uber calculates its cash inflows in two primary ways: what it calls 鈥淕ross Bookings鈥� and the more traditional 鈥漬et revenue鈥� measure. Gross Bookings, according to the Wall Street Journal, is 鈥渢he total value of trips before Uber takes its cut of the rides,鈥� which 鈥渕easures the overall demand鈥� for 鲍产别谤鈥檚 various services. Net revenue refers to the company鈥檚 revenue (which Uber generates by charging a market-making fee) after accounting or discounts and returns.

As various outlets have already reported, growth in gross bookings and net revenue are beginning to slow. This may spook some investors hoping for hockey stick-shaped growth charts, which may make 鲍产别谤鈥檚 growth-predicated valuation difficult to defend if growth stagnates over the long run.

Next, let鈥檚 take a look at two metrics which help measure the health of 鲍产别谤鈥檚 business: the ratio of net revenue to gross bookings (how much of all transaction volume Uber keeps for itself), and the ratio of gross profit to net revenue (gross margin), both presented in percentage terms.

Gross margin鈥攄erived by dividing gross profit by net revenue鈥攊s demarcated in yellow. 鲍产别谤鈥檚 gross margin is up, marginally, from the same time period last year but down from the prior quarter. 鲍产别谤鈥檚 cut of bookings is mostly flat.

Next, let鈥檚 take a look at the numbers Uber would like us to think are most reflective of its financial performance. Note that the EBITDA metric is subject to some financial chicanery because one can strip out some types of expenses.

Don鈥檛 let the reported profit in Q1 fool you. Uber still loses a lot of money. The profit, some $2.5 billion, is mostly the proceeds from sales of two international units鈥攁 total of $2.94 billion for selling its Russian operation to , and its Southeast Asian unit to .

Finally, here鈥檚 what Uber reports as its cash reserves and long-term debt.

Since Q1 of this year, Uber added $1.56 billion to its long term debt load, growing that figure by approximately 50 percent. Uber boosted its reserves of cash, restricted cash, and cash equivalents by nearly $1 billion in that same period.

Uber just recently began reporting its financial performance publicly. The company, now under 鈥檚 leadership, has one foot in the private markets, and, at least with respect to financial reporting, it has a foot in the public market door. How the market will ultimately value the cash-burning transportation giant is a question for public market investors to answer in 2019 at the earliest.

滨濒濒耻蝉迟谤补迟颈辞苍:听

Uber had another awkward weekend after its former CEO unilaterally appointed two new members to the firm’s board. The move surprised the unicorn’s new CEO and extant board.

But, from that situation has come two votes, . First, that the firm will accept Softbank’s massive investment and its companion governance changes. (That round will also provide a stiff slug of secondary for prior shareholders alongside raising a billion or more for Uber proper.) Second, :

In addition, directors approved a resolution for Uber to go public by 2019, the people briefed on the meeting said, setting up what could be one of the largest technology stock offerings in years.

If you thought that the Snap Inc. IPO was a goat rodeo, prepare for a real circus.

To remind ourselves, we have a decent look at the broadest swaths of Uber’s business: Its gross ride sales, its effective revenue, and its heavily adjusted losses. (In the case of Uber, we want to use its adjusted revenue, as that figure better accounts for UberPool top line.)聽 The numbers break down like this:

• $8.7 billion in Q2 gross bookings (Q1: $7.5 billion)
• $1.75 billion in Q2 adjusted revenue (Q1: $1.5 billion)
• $645 million in adjusted net loss (Q1: $708 million)

Throw in uncertainty regarding self-driving cars, rising competition both domestically and abroad () and Uber has a lot of work ahead of it to get public by 2019’s kickoff. The good news is that Uber has wrapped its third quarter like everyone else.

We should get new numbers from them in about a month. Start placing bets.

From the聽:

聽Global VC investing soars in Q3

• Global venture investment is at its highest point since the Dot-Com bubble, according to Crunchbase projections for the third quarter of 2017. Both deal counts and dollar volume are hitting multi-year highs, with total investment projected at around $60 billion, up over 30 percent from the second quarter. Read our full Q3 global investment report here.

Uber settles issues as it eyes IPO

• board approved a raft of measures that move the ride-hailing giant closer to becoming a public company. Directors voted to move ahead with a proposed investment by SoftBank, to eliminate super-voting rights, to expand the board, and to set a goal of going public by 2019.

Infinidat raises $95M for data storage

• , a provider of petabyte-scale data storage technology to large enterprises, closed a $95 million Series C financing round that values the company at $1.6 billion. Goldman Sachs Private Capital Investing led the round, with participation from TPG Growth.

Boston Scientific buys Apama Medical

• Boston Scientific is acquiring , a developer of catheters used in treating heart rhythm disorders, for $175 million up front and up to $125 million in milestone payments. Campbell, Calif.-based Apama previously raised $35 million in venture funding.