SAN FRANCISCO • What makes Uber Technologies the most valuable venture-backed technology company in the world?
Investors say size and growth. The business is transforming global transportation networks. On closer inspection of its financial performance, Uber also pioneered a very expensive way of establishing a market and staying on top.
Uber has had little trouble finding investors eager to buy into its vision. It relishes telling backers about gross bookings, or the amount riders pay for service.
That number is enormous, totalling US$37 billion (S$48.7 billion) last year. But most of that went to drivers. Uber's cut, or net revenue, came to US$7.4 billion. Compared to public companies with similar valuations, Uber's revenue lags well behind.
At the same time, Uber has worked to downplay its persistent losses. Because the company does not disclose financial results with much consistency, it is easy to lose sight of how much of investors' money Uber has spent.
Since its founding nine years ago, Uber has burned through about US$10.7 billion, according to a person familiar with the matter.
Over the past decade, only one public technology company in North America has lost more in a year than Uber lost last year. None has burned such a tremendous amount in the first stage of its life, according to data compiled by Bloomberg.
Investors have contributed US$17.3 billion to Uber, said the person, who is not authorised to discuss the figure and asked not to be identified - an enormously long leash for the company to experiment with and subsidise global growth. Figuring out whether that investment will pay off is partly based on what you think will happen to Uber's losses.
An analysis of Uber's financial position shows that Uber is a corporate anomaly. Few companies in history have grown so fast or lost so much money in such a short time. Uber has developed what may be considered a Peter Pan syndrome. After reaching a stage of maturity most companies never realise, it has yet to turn a profit and remains deeply in the red.
Amazon.com is famous for its losses over the years. But even in the heyday of the dot.com bubble, the e-commerce giant never came close. Its biggest loss was in 2000 - US$1.4 billion, or about US$2 billion adjusted for inflation. Most years, it turns a profit, albeit a small one.
What Uber backers can point to, though, is a nearly unmatched pace of sales growth. Even as Uber's revenue reached US$2.3 billion in the fourth quarter of last year, its annual growth rate remained strong, at about 90 per cent compared with 2016. That's faster than most tech companies with a similar valuation.