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Uber battles its own history in a historic IPO filing

It’s the most important tech IPO in five years.

Travis Kalanick, Uber’s founder and ex-CEO, being confronted with TV cameras as he walks out of the courthouse.
Travis Kalanick, Uber’s founder and ex-CEO.
Elijah Nouvelage/Getty Images

Uber’s decade-in-the-making IPO document released Thursday reveals a company that is still coming to terms with the lowest points in its history, pulling back the curtain on a company that is still, at times, battling itself.

Almost two years after founder Travis Kalanick was ejected as CEO in one of the most dramatic boardroom fights in recent Silicon Valley history, Uber is still so haunted by the affair that its travails are well-documented in the historic 400-page filing with the SEC.

And yet, Uber has conquered those to build a gargantuan business. The company brought in $11.3 billion in revenue last year — five times as much as its chief US rival, Lyft (which is only mentioned six times in the whole document).

Uber managed to eke out a profit of $1 billion thanks in part to a sale of Grab and Yandex in 2018, though it had an operating loss of $3 billion. Lyft, which operates solely in the US and Canada, had a net loss of $911 million.

But revenue from Uber’s core ridesharing service has slowed dramatically. It actually declined in the last quarter of 2018 to $2.314 billion, down from $2.315 billion in the third quarter, but rose 16 percent from a year earlier. That’s a huge problem, since ride-sharing made up 91 percent of its net revenue in its fourth quarter.

Net revenue from Uber Eats also declined two quarters in a row, as Uber has taken a lower rate of revenue to gross bookings in an effort to bring on “large-volume restaurants at a lower service fee and in geographies with greater competition, such as the United States and India.” The only business that grew quarter over quarter was what it classifies as “other bets,” which mainly includes its trucking app for carriers and shippers, Uber Freight.

Uber’s path to profitability is strained but not atypical for high-growth startups these days. Every company has “risk factors” — the doomsday-is-coming rhetoric at the front of the document — but Uber’s is unusual in that it makes clear that its struggles have been as much cultural as they are financial.

CEO Dara Khosrowshahi, who succeeded Kalanick in 2017, acknowledges that the company made “missteps along the way” and that “we didn’t get everything right” — accurate and self-aware statements, to be sure, but ones that reflect an unusual amount of candor for a company soon to live and die by how public investors judge it.

Uber calls out its “workplace culture” as a risk factor, saying it “created significant operational and cultural challenges that have in the past harmed, and may in the future continue to harm, our business results and financial condition.”

It recalls the worst moments from 2017, including the #DeleteUber campaign: “We have previously received a high degree of negative media coverage around the world, which has adversely affected our brand and reputation and fueled distrust of our company.”

And the company goes to pains to show how it has overhauled its governance to disempower Kalanick and the investors he warred with.

Uber’s significance to the startup world cannot be overstated. Its exit will create billionaires and loads of millionaires, pay out historic investments made by venture capital firms like Benchmark Capital and the SoftBank Vision Fund, and, more broadly, put some symbolic flourish on this generation of post-recession startups.

Uber is reportedly expected to be valued at over $90 billion and will sell about $10 billion worth of shares in the company — figures that will be finalized in the next few weeks. That would make it the largest US-listed IPO since Alibaba in 2014.

The company has become something of a cultural touchstone since its founding in 2009. The rise of Uber has spawned multiple books, turned Kalanick into a borderline household name, and become a verb similar to Google or Facebook.

And of course, most importantly, it has dramatically reshaped how people around the world travel, posed an existential threat in some markets to the incumbent taxi industry, and created a new labor market of independent contractors who drive on the platform on their own schedule.

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