Uber needs to thread the needle on bookings, take rate, and expenses

Uber (UBER) will start its first day as a public company with a cash balance of about $15 billion. At its current burn rate, that gives it about 6-8 years to become cash flow positive. Uber's long-term success hinges on its ability to continue adding billions to gross bookings ($50 billion in 2018), while raising its revenue take rate (21% in 2018), and dialing back sales and marketing spend (28% of revenue).

S&M spend has led to strong growth in bookings, which reached $14.2 billion in the fourth quarter (+37% y/y). 



Meanwhile, Uber's take rate has come under pressure in recent quarters due to intense competition from Lyft; Ridesharing adjusted take rate peaked at 23% in the 1Q18, but is expected to be 20% in the 1Q19. In addition, Uber Eats has grown bookings faster than Ridesharing, and Eats has a much lower take rate, largely because of payments Uber makes to encourage more Eats drivers. So while combined gross bookings from Ridesharing and Eats grew 21% from the 2Q18 to the 1Q19, their adjusted revenue grew just 2.8% during the same period, remaining at about $2.5 billion. 

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