Skip to main content

Market Overview

Uber And Lyft: Revenue Growth In Line As Companies Eye IPOs

Uber And Lyft: Revenue Growth In Line As Companies Eye IPOs

With 2019 just a few months away, investors' interest in the third quarter financials of Uber and Lyft has been sky-high, as the cab-hailing companies are entangled in a high stakes game towards going public next year. Though a private company, Uber chooses to put its financial results out every quarter and the latest release showed the company to be on a stable footing, as it marches towards the much-coveted IPO.

Uber registered an adjusted net loss of $939 million in Q3, a number which rose by 38 percent from last quarter when it was $680 million. However, adjusted EBITDA loss this quarter has gone down 13 percent year-on-year, standing at $527 million. Revenue growth increased by 9 percent from Q2 to $2.95 billion, with the year-on-year growth registering a sizeable 38 percent. This does not include contribution from UberEats, which racked up $2.1 billion in revenue — also marking the first time Uber broke out UberEats' contribution from its gross revenue sheets.

The numbers show that Uber is in a consolidation phase, as growth trajectories came down over the last two quarters. The company has mentioned that this was because of its heavy investments across different verticals like food delivery, freight hauling and its expansion into new mobility services like the e-bike sharing market, where the company acquired e-scooter startup Jump for an estimated $200 million this year.

UberEats, the food delivery business of Uber is in a robust expansion phase, with Uber giving out a statement last month about its intention to reach 70 percent of the U.S. population by the end of this year. Notably, the business is the fastest growing food delivery service in the country, with it already having the means to reach 50 percent of the U.S. population.

While Uber's game plan seems to be about diversifying its services across different verticals, its ride-hailing competitor Lyft looks to be bolstering its services in the mobility segment rather than forking to various industries. Though valued at $15 billion after its most recent financing, Lyft's valuation pales in comparison to Uber, which investors believe would be valued close to $120 billion when it goes public next year.

  Learn more today

Uber has a significantly larger presence even in the taxi-hailing business, as it has made a mark across dozens of countries, and has also sold off operations in countries like China and Russia, while Lyft is yet to venture outside the United States.

That being said, financial data gathered by The Information on Lyft show that the company's growth has been nothing short of impressive, with gross profit margins rising by 45 percent in Q3 as opposed to an equally consistent 38 percent growth in Q3 2017. The numbers also show that Lyft's percentage of marketing expenditure against its revenue is going down. The company spent $242 million on marketing in Q3, which was equal to 43 percent of its revenue, versus a marketing budget equalling 54 percent of the revenue in Q3 last year.

Coincidentally, Uber has also been cautious with its marketing efforts, cutting it back from spending 32.5 percent of its revenue in Q3 2017, to a more modest 27.1 percent this quarter. Then again, it would not be prudent to compare Uber with Lyft, as Uber's marketing efforts go into a lot more segments and markets than Lyft, which concentrates only on mobility-related services.

Apart from tussling for market share in the cab riding space, Uber and Lyft have taken the fight to the e-bike sharing segment as concerns erupted over scooter-sharing companies eating into their primary market. In a bid to best Uber's Jump, Lyft has acquired Motivate, one of the largest bike-sharing network in the U.S., making it another closely contested vertical. Expansion into the e-biking ecosystem is critical for both the companies, as pricing wars and a more troubling possibility of a growth ceiling in the taxi market could sabotage their runway to the IPO.

A lot of it has to do with Uber's initial estimate on the size of the U.S. taxi hailing market, pegging it at around $1 trillion. However, as the other factors like difficulty in retaining drivers, domestic competition, and the rise of autonomous cars weighed in, the revised market size scaled down drastically to a more modest $150 billion annually by the next decade.

All said and done, Uber and Lyft are consolidating in the U.S. cab-hailing market, shunting out competitors and effectively making it an oligopoly. Though Lyft might not have the big numbers that Uber does, its growth has traced a very similar path to the latter, with potential IPOs on the line for both the companies next year.


Related Articles

View Comments and Join the Discussion!

Posted-In: Lyft UberEarnings News

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at