UBER TECHNOLOGIES, INC. The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. We have elected to omit discussion on the earliest of the three years covered by the consolidated financial statements presented. Refer to Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations located in our Annual Report on Form 10-K for the year endedDecember 31, 2020 , filed onMarch 1, 2021 , for reference to discussion of the fiscal year endedDecember 31, 2019 , the earliest of the three fiscal years presented. In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. You should review the sections titled "Special Note Regarding Forward-Looking Statements" for a discussion of forward-looking statements and in Part I, Item 1A, "Risk Factors", for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Annual Report on Form 10-K. Overview We are a technology platform that uses a massive network, leading technology, operational excellence, and product expertise to power movement from point A to point B. We develop and operate proprietary technology applications supporting a variety of offerings on our platform. We connect consumers with providers of ride services and merchants as well as delivery service providers for meal preparation, grocery and other delivery services.Uber also connects consumers with public transportation networks. We use this same network, technology, operational excellence, and product expertise to connect shippers with carriers in the freight industry. We are also developing technologies that provide new solutions to solve everyday problems. 48 --------------------------------------------------------------------------------
COVID-19
InMarch 2020 , theWorld Health Organization declared the outbreak of coronavirus ("COVID-19") a pandemic. The COVID-19 pandemic has rapidly changed market and economic conditions globally, impacting Drivers, Merchants, consumers and business partners, as well as our business, results of operations, financial position, and cash flows. Various governmental restrictions, including the declaration of a federal National Emergency, multiple cities' and states' declarations of states of emergency, school and business closings, quarantines, restrictions on travel, limitations on social or public gatherings, and other measures have, and may continue to have, an adverse impact on our business and operations, including, for example, by reducing the global demand for Mobility rides. Furthermore, we are experiencing and expect to continue to experience Driver supply constraints, and such supply constraints have been and may continue to be impacted by concerns regarding the COVID-19 pandemic.
COVID-19 Response Initiatives
We continue to prioritize the health and safety of our consumers, Drivers and Merchants, our employees and the communities we serve and continue to believe we will play an important role in the economic recovery of cities around the globe. We are focused on navigating the challenges presented by COVID-19 through preserving our liquidity and managing our cash flow by taking preemptive action to enhance our ability to meet our short-term liquidity needs. The pandemic has reduced the demand for our Mobility offering globally, while accelerating the growth of our Delivery offerings. We have responded to the COVID-19 pandemic by launching new, or expanding existing, services or features on an expedited basis, particularly those related to delivery of food and other goods. To comply with social distancing guidelines of national, state and local governments, we have temporarily suspended our shared rides Mobility offering in most markets, and implemented "leave at door" delivery options for Delivery offerings. Additionally, we have asked that all employeeswho are able to do so, to work remotely. As vaccination rates increase inthe United States , we are observing that consumer demand for Mobility is recovering faster than driver availability, and consumer demand for Delivery continues to exceed Courier availability. During the first half of 2021, we announced that we are increasing investments in driver incentives to improve driver availability in the near-term. While we continue to assess the impact from the COVID-19 outbreak, we are unable to accurately predict the full impact of COVID-19 on our business, results of operations, financial position, and cash flows due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, any future waves or resurgences of the virus, variants of the virus, the administration, adoption and efficacy of vaccines inthe United States and internationally, additional actions that may be taken by governmental authorities, the further impact on the business of Drivers, Merchants, consumers, and business partners, and other factors identified in Part I, Item 1A. "Risk Factors" of this Annual Report on Form 10-K.
Driver Classification Developments
The classification of Drivers is currently being challenged in courts, by legislators and by government agencies inthe United States and abroad. We are involved in numerous legal proceedings globally, including putative class and collective class action lawsuits, demands for arbitration, charges and claims before administrative agencies, and investigations or audits by labor, social security, and tax authorities that claim that Drivers should be treated as our employees (or as workers or quasi-employees where those statuses exist), rather than as independent contractors. Of particular note are proceedings inCalifornia , where onMay 5, 2020 , theCalifornia Attorney General, in conjunction with the city attorneys forSan Francisco ,Los Angeles andSan Diego , filed a complaint inSan Francisco Superior Court (the "Court") againstUber and Lyft, alleging that drivers are misclassified, and sought an injunction and monetary damages related to the alleged competitive advantage caused by the alleged misclassification of drivers. OnAugust 10, 2020 , the Court issued a preliminary injunction order prohibiting us from classifying Drivers as independent contractors and from violating various wage and hour laws. Following a stay of the injunction and our unsuccessful appeal of the injunction to aCourt of Appeal , we were ordered to comply with the preliminary injunction. InNovember 2020 ,California voters approved Proposition 22, a state ballot initiative that provides a framework for drivers that use platforms like ours for independent work. Proposition 22 went into effect inDecember 2020 . Although our stipulation to dissolve theCalifornia Attorney General's preliminary injunction was granted inApril 2021 , that litigation remains pending, and we also may face liability relating to periods before the effective date of Proposition 22. InJanuary 2021 , a petition was filed with theCalifornia Supreme Court by several drivers and a labor union alleging that Proposition 22 is unconstitutional, which was denied. The same drivers and labor union have since filed a similar challenge inCalifornia Superior Court , and inAugust 2021 , the court ruled that Proposition 22 is unconstitutional. OnSeptember 21, 2021 , theState of California filed an appeal of that decision with theCalifornia Court of Appeal , and the Protect App-Based Drivers and Services has also filed an appeal. To comply with Proposition 22, we have incurred and expect to incur additional expenses, including expenses associated with a guaranteed minimum earnings floor for Drivers, insurance for injury protection and subsidies for health care. We do not expect these changes will have a material impact on our business, results of operations, financial position, or cash flows.
Also of note, on
49
--------------------------------------------------------------------------------
contractors and employees) in the UK rather than independent contractors. The
tribunal ruled on October 28, 2016 that the Drivers were workers whenever our
app was switched on and they were ready and able to take trips, based on an
assessment of the app in July 2016 . The Court of Appeal rejected our appeal in a
majority decision on December 19, 2018 . We appealed to the Supreme Court and a
hearing at the Supreme Court took place in July 2020 .
On February 19, 2021 , the Supreme Court of the UK upheld the tribunal ruling.
Subsequently, we initiated a historical claims settlement process for UK
drivers. Damages may include back pay including holiday pay and minimum wage.
Additional claimants have also filed and each claimant will be required to bring
their own separate action to an employment tribunal to determine whether they
met the "worker" classification and if so, how much each claimant will be
awarded.
On March 16, 2021 , we announced that more than 70,000 drivers in the UK will be
treated as workers, earning at least the National Living Wage when driving with
Uber . They will also be paid for holiday time and all those eligible will be
automatically enrolled into a pension plan. We have also completed a settlement
process with drivers in the UK to proactively resolve historical claims relating
to their classification under UK law.
On June 23, 2021 , we received a compliance notice from the UK pension regulator
to facilitate our auto-enrollment implementation. The pension regulator has
confirmed that Uber will be required to pay historic company contributions, but
that we are not required to pay the driver component of historic pension
contributions unless we fail to comply in which case the amount equivalent to
those contributions would be payable as a penalty. We have completed the
enrollment of eligible drivers in the UK into a pension plan.
Our portal for drivers to register for a settlement of historical holiday pay
and national minimum wage liabilities closed on July 22, 2021 and we have
extended offers to all drivers eligible for settlement who are not already
represented by an attorney and have made payments to the drivers who accepted
our offers. We are currently in mediation with the drivers who are represented
by one of three law firms who represent large cohorts of drivers. Compensation
hearings will take place in 2022 for claimants who have not settled their
historic claims, where the tribunal will assess our position on the correct
approach to working time.
In
If, as a result of legislation or judicial decisions, we are required to
classify Drivers as employees, workers or quasi-employees where those statuses
exist, we would incur significant additional expenses for compensating Drivers,
including expenses associated with the application of wage and hour laws
(including minimum wage, overtime, and meal and rest period requirements),
employee benefits, social security contributions, taxes (direct and indirect),
and potential penalties. Additionally, we may not have adequate Driver supply as
Drivers may opt out of our platform given the loss of flexibility under an
employment model, and we may not be able to hire a majority of the Drivers
currently using our platform. Any of these events could negatively impact our
business, result of operations, financial position, and cash flows.
For a discussion of risk factors related to how misclassification challenges may
impact our business, result of operations, financial position and operating
condition and cash flows, see the risk factor titled "-Our business would be
adversely affected if Drivers were classified as employees, workers or
quasi-employees" included in Part I, Item 1A, "Risk Factors", and Note 15 -
Commitments and Contingencies to our consolidated financial statements included
in Part II, Item 8, "Financial Statements and Supplementary Data," of this
Annual Report on Form 10-K.
In addition, if we are required to classify Drivers as employees, this may
impact our current financial statement presentation including revenue, cost of
revenue, incentives and promotions as further described in Note 1 - Description
of Business and Summary of Significant Accounting Policies in the notes to the
consolidated financial statements included in Part II, Item 8, "Financial
Statements and Supplementary Data," and the section titled "Critical Accounting
Estimates" in Part II, Item 7, of this Annual Report on Form 10-K.
50
--------------------------------------------------------------------------------Financial and Operational Highlights
Constant Currency
Year Ended December 31, (1)
2020 to 2021 2020 to 2021 %
(In millions, except percentages) 2020 2021 % Change Change
Monthly Active Platform Consumers ("MAPCs")
(2), (3) 93 118 27 %
Trips (2) 5,025 6,368 27 %
Gross Bookings (2) $ 57,897 $ 90,415 56 % 53 %
Revenue $ 11,139 $ 17,455 57 % 54 %
Net loss attributable to Uber Technologies,
Inc. (4) $ (6,768) $ (496) 93 %
Mobility Adjusted EBITDA $ 1,169 $ 1,596 37 %
Delivery Adjusted EBITDA $ (873) $ (348) 60 %
Adjusted EBITDA (1), (2) $ (2,528) $ (774) 69 %
(1) See the section titled "Reconciliations of Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measure.
(2) See the section titled "Certain Key Metrics and Non-GAAP Financial Measures" below for more information.
(3) MAPCs presented for annual periods are MAPCs for the fourth quarter of the year.
(4) Net loss attributable to
Highlights for 2021
Overall Gross Bookings increased by$32.5 billion in 2021, up 56%, or 53% on a constant currency basis, compared to 2020. Delivery Gross Bookings grew 66% from 2020, on a constant currency basis, due to an increase in food delivery orders and higher basket sizes as a result of stay-at-home order demand related to COVID-19, as well as continued expansion acrossU.S. and international markets. Additionally, we saw an increase in Delivery revenue resulting from an increase in certain Courier payments and incentives that are recorded in cost of revenue, where we are primarily responsible for delivery services and pay Couriers for services provided. Mobility Gross Bookings grew 36%, on a constant currency basis, from 2020, due to increases in Trip volumes as the business recovers from the impacts of COVID-19. Revenue was$17.5 billion , or up 57% year-over-year, reflecting the overall growth in our Delivery business and an increase in Freight revenue attributable to the acquisition of Transplace in the fourth quarter of 2021 as well as growth in the number of shippers and carriers on the network combined with an increase in volumes with our top shippers. Net loss attributable toUber Technologies, Inc. was$496 million , a 93% improvement year-over-year, driven by a$1.6 billion pre-tax gain on the sale of our ATG Business to Aurora, a$1.6 billion pre-tax net benefit relating toUber 's equity investments, as well as reductions in our fixed cost structure and increased variable cost efficiencies. Net loss attributable toUber Technologies, Inc. also included$1.2 billion of stock-based compensation expense. Adjusted EBITDA loss was$774 million , improving$1.8 billion from 2020 with Mobility Adjusted EBITDA profit of$1.6 billion . Additionally, Delivery Adjusted EBITDA loss of$348 million , improved$525 million and Delivery Adjusted EBITDA margin as a percentage of Delivery Gross Bookings improved to (0.7)% from (2.9)%, compared to 2020.
We ended the year with
Other Developments for 2021
Acquisitions
Remaining Interests in Cornershop
In
OnOctober 12, 2021 , we completed the acquisition of 100% ownership interest inThe Drizly Group, Inc. ("Drizly"), an on-demand alcohol marketplace inNorth America , allowing us to expand alcohol offerings in our Delivery business. 51 --------------------------------------------------------------------------------
Transplace
OnNovember 12, 2021 , we completed the acquisition of 100% ownership interest inTupelo Parent, Inc. ("Transplace"), a leading transportation management and third-party logistics provider inNorth America . The acquisition of Transplace is expected to allow us to expand ourUber Freight business through Transplace's expertise in transportation management. For additional information on acquisitions, see Note 18 - Business Combinations included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
Divestitures
ATG Business to Aurora
OnJanuary 19, 2021 , we completed the previously announced sale ofApparate USA LLC ("Apparate" or the "ATG Business"), a subsidiary focused on the development and commercialization of autonomous vehicle technology, to Aurora Innovation, Inc. ("Aurora"). As a result, our controlling interest and the non-controlling interests in the ATG Business were settled, and ownership of the ATG Business transferred to Aurora. For additional information, see Note 19 - Divestitures included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
Other Developments
OnAugust 30, 2021 , we entered into an agreement (the "Framework Agreement") with Yandex N.V. ("Yandex") to restructure our joint ventures,MLU B.V . andYandex Self Driving Group B.V. ("SDG"). Pursuant to the Framework Agreement, we completed the sale of our entire equity interest in SDG and 4.5% of our equity interest inMLU B.V . to Yandex during the third quarter of 2021. During the fourth quarter of 2021 and pursuant to the Framework Agreement,MLU B.V . completed the spin-off of its delivery businesses: Yandex.Eats, Yandex.Lavka and Yandex.Delivery (collectively, "Demerged Businesses"). Immediately following the demerger, Yandex acquired all of our equity interest in the Demerged Businesses. For additional information, see Note 4 - Equity Method Investments included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
Legacy Auto Insurance Transfer
OnSeptember 27, 2021 ,Aleka Insurance, Inc. , our wholly-owned captive insurance subsidiary, entered into a Loss Portfolio Transfer Reinsurance Agreement (the "LPTA") with James River Group companies ("James River"), effectiveJuly 1, 2021 . Pursuant to the LPTA, our captive insurance subsidiary reinsured certain automobile liability insurance risks relating to activity on our platform between 2013 and 2019 in exchange for payment by James River to our captive insurance subsidiary of a premium. For additional information, see Note 1 - Description of Business and Summary of Significant Accounting Policies included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
Components of Results of Operations
Revenue
We generate substantially all of our revenue from fees paid by Drivers and Merchants for use of our platform. We have concluded that we are an agent in these arrangements as we arrange for other parties to provide the service to the end-user. Under this model, revenue is net of Driver and Merchant earnings and Driver incentives. We act as an agent in these transactions by connecting consumers to Drivers and Merchants to facilitate a Trip, meal or grocery delivery service. For additional discussion related to our revenue, see the section titled "Management's Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Estimates - Revenue Recognition," "Note 1 - Description of Business and Summary of Significant Accounting Policies," and "Note 2 - Revenue" to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
Cost of Revenue, Exclusive of Depreciation and Amortization
Cost of revenue, exclusive of depreciation and amortization, primarily consists of certain insurance costs related to our Mobility and Delivery offerings, credit card processing fees, bank fees, data center and networking expenses, mobile device and service costs, costs incurred for certain Delivery transactions where we are primarily responsible for delivery services and pay Couriers for services provided, costs incurred with carriers forUber Freight transportation services, amounts related to fare chargebacks and other credit card losses. We expect that cost of revenue, exclusive of depreciation and amortization, will fluctuate on an absolute dollar basis for the foreseeable future in line with Trip volume changes on the platform. As Trips increase or decrease, we expect related changes for insurance costs, credit card processing fees, hosting and co-located data center expenses, maps license fees, and other cost of revenue, exclusive of depreciation and amortization. 52 --------------------------------------------------------------------------------
Operations and Support
Operations and support expenses primarily consist of compensation expenses, including stock-based compensation, for employees that support operations in cities, including the general managers, Driver operations, platform user support representatives and community managers. Also included is the cost of customer support, Driver background checks and the allocation of certain corporate costs. As our business recovers from the impacts of COVID-19 and Trip volume increases, we would expect operations and support expenses to increase on an absolute dollar basis for the foreseeable future, but decrease as a percentage of revenue as we become more efficient in supporting platform users.
Sales and Marketing
Sales and marketing expenses primarily consist of compensation costs, including stock-based compensation to sales and marketing employees, advertising costs, product marketing costs and discounts, loyalty programs, promotions, refunds, and credits provided to end-userswho are not customers, and the allocation of certain corporate costs. We expense advertising and other promotional expenditures as incurred. As our business recovers from the impacts of COVID-19, we would anticipate sales and marketing expenses to increase on an absolute dollar basis for the foreseeable future but vary from period to period as a percentage of revenue due to timing of marketing campaigns.
Research and Development
Research and development expenses primarily consist of compensation costs, including stock-based compensation, for employees in engineering, design and product development. Expenses includes ATG and Other Technology Programs development expenses prior to the divestiture of our ATG business inJanuary 2021 , as well as expenses associated with ongoing improvements to, and maintenance of, existing products and services, and allocation of certain corporate costs. We expense substantially all research and development expenses as incurred. We expect research and development expenses to increase and vary from period to period as a percentage of revenue as we continue to invest in research and development activities relating to ongoing improvements to and maintenance of our platform offerings and other research and development programs, offset by a decrease in investments in our ATG and Other Technology Programs subsequent to the sale of our ATG Business.
General and Administrative
General and administrative expenses primarily consist of compensation costs, including stock-based compensation, for executive management and administrative employees, including finance and accounting, human resources, policy and communications, legal, and certain impairment charges, as well as allocation of certain corporate costs, occupancy, and general corporate insurance costs. General and administrative expenses also include certain legal settlements. As our business recovers from the impacts of COVID-19 and Trip volume increases, we expect that general and administrative expenses will increase on an absolute dollar basis for the foreseeable future, but decrease as a percentage of revenue as we achieve improved fixed cost leverage and efficiencies in our internal support functions.
Depreciation and Amortization
Depreciation and amortization expenses primarily consist of depreciation on buildings, site improvements, computer and network equipment, software, leasehold improvements, furniture and fixtures, and amortization of intangible assets. Depreciation includes expenses associated with buildings, site improvements, computer and network equipment, leased vehicles, and furniture, fixtures, as well as leasehold improvements. Amortization includes expenses associated with our capitalized internal-use software and acquired intangible assets.
As our business recovers from the impacts of COVID-19, we would anticipate depreciation and amortization expenses to increase as we continue to build out our network infrastructure and building locations.
Interest Expense
Interest expense consists primarily of interest expense associated with our outstanding debt, including accretion of debt discount. For additional detail related to our debt obligations, see "Note 7 - Long-Term Debt and Revolving Credit Arrangements" to our consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. Other Income (Expense), Net
Other income (expense), net primarily includes the following items:
53
--------------------------------------------------------------------------------•Interest income, which consists primarily of interest earned on our cash and cash equivalents and restricted cash and cash equivalents.
•Foreign currency exchange gains (losses), net, which consist primarily of remeasurement of transactions and monetary assets and liabilities denominated in currencies other than the functional currency at the end of the period.
•Gain on business divestitures, net.
•Gain from sale of investments, which consists primarily of gain from the sale of our entire equity interest in theYandex Self Driving Group B.V. ("SDG"), and the derecognition of our entire equity interest in the Demerged Businesses.
•Unrealized gain (loss) on debt and equity securities, net, which consists primarily of gains (losses) from fair value adjustments relating to our marketable and non-marketable securities.
•Impairment of debt and equity securities, primarily related to an impairment
charge recognized on our
•Other, net.
Provision for (Benefit from) Income Taxes
We are subject to income taxes inthe United States and foreign jurisdictions in which we do business. These foreign jurisdictions have different statutory tax rates than those inthe United States . Additionally, certain of our foreign earnings may also be taxable inthe United States . Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, changes in the valuation allowance on ourU.S. andNetherlands' deferred tax assets, and changes in tax laws.
Equity Method Investments
Equity method investments primarily includes the results of our share of income or loss from our Yandex.Taxi joint venture.
Results of Operations
The following table summarizes our consolidated statements of operations for each of the periods presented (in millions):
Year Ended December 31,
2020 2021
Revenue $ 11,139 $ 17,455
Costs and expenses
Cost of revenue, exclusive of depreciation and amortization shown
separately below 5,154 9,351
Operations and support 1,819 1,877
Sales and marketing 3,583 4,789
Research and development 2,205 2,054
General and administrative 2,666 2,316
Depreciation and amortization 575 902
Total costs and expenses 16,002 21,289
Loss from operations (4,863) (3,834)
Interest expense (458) (483)
Other income (expense), net (1,625) 3,292
Loss before income taxes and loss from equity method investments (6,946) (1,025)
Provision for (benefit from) income taxes (192) (492)
Loss from equity method investments (34) (37)
Net loss including non-controlling interests (6,788) (570)
Less: net loss attributable to non-controlling interests, net of tax
(20) (74)
Net loss attributable to Uber Technologies , Inc. $ (6,768) $ (496)
54
--------------------------------------------------------------------------------
The following table sets forth the components of our consolidated statements of
operations for each of the periods presented as a percentage of revenue (1):
Year Ended December 31,
2020 2021
Revenue 100 % 100 %
Costs and expenses
Cost of revenue, exclusive of depreciation and amortization shown
separately below 46 % 54 %
Operations and support 16 % 11 %
Sales and marketing 32 % 27 %
Research and development 20 % 12 %
General and administrative 24 % 13 %
Depreciation and amortization 5 % 5 %
Total costs and expenses 144 % 122 %
Loss from operations (44) % (22) %
Interest expense (4) % (3) %
Other income (expense), net (15) % 19 %
Loss before income taxes and loss from equity method investments (62) % (6) %
Provision for (benefit from) income taxes (2) % (3) %
Loss from equity method investments - % - %
Net loss including non-controlling interests (61) % (3) %
Less: net loss attributable to non-controlling interests, net of tax
- % - %
Net loss attributable to Uber Technologies , Inc. (61) % (3) %
(1) Totals of percentage of revenues may not foot due to rounding.
Comparison of the Years Ended
Revenue
Year Ended December 31, 2020 to 2021 %
(In millions, except percentages) 2020 2021 Change
Revenue $ 11,139 $ 17,455 57 %
2021 Compared to 2020
Revenue increased $6.3 billion , or 57%, primarily attributable to an increase in
Gross Bookings of 56%, or 53% on a constant currency basis. The increase in
Gross Bookings was primarily driven by an increase in Delivery Gross Bookings of
71%, or 66% on a constant currency basis, due to an increase in food delivery
orders and higher basket sizes as a result of stay-at-home order demand related
to COVID-19, as well as continued expansion across U.S. and international
markets. The increase was also driven by Mobility Gross Bookings growth of 38%,
or 36% on a constant currency basis, due to increases in Trip volumes as the
business recovers from the impacts of COVID-19. Additionally, we saw an increase
in Delivery revenue resulting from an increase in certain Courier payments and
incentives that are recorded in cost of revenue, where we are primarily
responsible for delivery services and pay Couriers for services provided.
Cost of Revenue, Exclusive of Depreciation and Amortization
Year Ended
December 31, 2020 to 2021 %
(In millions, except percentages) 2020 Change 2021
Cost of revenue, exclusive of depreciation and
amortization $ 5,154 $ 9,351 81 %
Percentage of revenue 46 % 54 %
2021 Compared to 2020
Cost of revenue, exclusive of depreciation and amortization, increased $4.2
billion , or 81%, mainly due to a $2.1 billion increase in Courier payments and
incentives in certain markets, a $660 million increase in insurance expense
primarily due to an increase in miles driven in our Delivery business, and a
$873 million increase in Freight carrier payments.
55
--------------------------------------------------------------------------------
Operations and Support
Year Ended
December 31, 2020 to 2021 %
(In millions, except percentages) 2020 Change 2021
Operations and support $ 1,819 $ 1,877 3 %
Percentage of revenue 16 % 11 %
2021 Compared to 2020
Operations and support expenses increased $58 million , or 3%, primarily
attributable to a $71 million increase in external contractor expenses and a $67
million increase in stock-based compensation expense, partially offset by an $82
million decrease in employee headcount costs.
Sales and Marketing
Year Ended
December 31, 2020 to 2021 %
(In millions, except percentages) 2020 Change 2021
Sales and marketing $ 3,583 $ 4,789 34 %
Percentage of revenue 32 % 27 %
2021 Compared to 2020
Sales and marketing expenses increased $1.2 billion , or 34%, primarily
attributable to a $681 million increase in consumer advertising expenses as well
as an increase in consumer discounts, rider facing loyalty expense, promotions,
credits and refunds of $384 million to $2.4 billion compared to $2.0 billion in
the same period in 2020.
Research and Development
Year Ended
December 31, 2020 to 2021 %
(In millions, except percentages) 2020 Change 2021
Research and development $ 2,205 $ 2,054 (7) %
Percentage of revenue 20 % 12 %
2021 Compared to 2020
Research and development expenses decreased
General and Administrative
Year Ended
December 31, 2020 to 2021 %
(In millions, except percentages) 2020 Change 2021
General and administrative $ 2,666 $ 2,316 (13) %
Percentage of revenue 24 % 13 %
2021 Compared to 2020
General and administrative expenses decreased $350 million , or 13%, primarily
attributable to a $202 million decrease in employee headcount costs and a $193
million decrease in impairment charges related to our New Mobility reporting
unit recorded during the first quarter of 2020 primarily related to COVID-19
impacts on certain markets, partially offset by a $102 million increase in
stock-based compensation expense.
Depreciation and Amortization
Year Ended
December 31, 2020 to 2021 %
(In millions, except percentages) 2020 Change 2021
Depreciation and amortization $ 575 $ 902 57 %
Percentage of revenue 5 % 5 %
2021 Compared to 2020
Depreciation and amortization expenses increased
56
--------------------------------------------------------------------------------
expenses related to acquired intangible assets, primarily held by Postmates ,
Transplace, Drizly , and Cornershop, and an increase in building, site
improvements, and leased server depreciation, partially offset by a decrease in
amortization expense related to Careem fully amortized intangible assets.
Interest Expense
Year Ended
December 31, 2020 to 2021
(In millions, except percentages) 2020 % Change 2021
Interest expense $ (458) $ (483) 5 %
Percentage of revenue (4) % (3) %
2021 Compared to 2020
Interest expense increased by$25 million , or 5%, primarily due to additional interest expense resulting from the issuance of our$1.5 billion 2029 Senior Notes inAugust 2021 . Other Income (Expense), Net Year Ended December 31, 2020 to 2021 % (In millions, except percentages) 2020 2021 Change Interest income $ 55$ 37 (33) % Foreign currency exchange gains (losses), net (128) (67) 48 % Gain on business divestitures, net 204 1,684 ** Gain from sale of investments - 413 ** Unrealized gain (loss) on debt and equity securities, net (125) 1,142 ** Impairment of debt and equity securities (1,690) - ** Other, net 59 83 41 % Other income (expense), net$ (1,625) $ 3,292 ** Percentage of revenue (15) % 19 %
** Percentage not meaningful.
2021 Compared to 2020
Interest income decreased by
Foreign currency exchange gains (losses), net decreased by$61 million due to both realized and unrealized gains (losses) on our treasury funding and accrued legal contingencies. Gain on business divestitures, net increased by$1.5 billion due to primarily due to a$1.6 billion gain on the sale of our ATG Business to Aurora recognized in the first quarter of 2021. For additional information, see Note 19 - Divestitures included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. Gain from sale of investments increased by$413 million primarily due to the sale to Yandex of our (i) 4.5% equity interest inMLU B.V ., (ii) our entire equity interest inYandex Self Driving Group B.V. and (iii) all of our equity interest in the Demerged Businesses. For additional information, see Note 4 - Equity Method Investments included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K. Unrealized gain (loss) on debt and equity securities, net increased by$1.3 billion primarily due to a$1.6 billion net unrealized gain on our Grab investment, a$1.6 billion unrealized gain on our Aurora Investments and a$991 million unrealized gain on our Zomato investment, partially offset by a$3.0 billion unrealized loss on ourDidi investment. For additional information, see Note 3 - Investments and Fair Value Measurement included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
Impairment of debt and equity securities decreased by
57
--------------------------------------------------------------------------------Provision for (Benefit from) Income Taxes
Year Ended
December 31, 2020 to 2021
(In millions, except percentages) 2020 % Change 2021
Provision for (benefit from) income taxes $ (192) $ (492) (156) %
Effective tax rate 2.8 % 48.0 %
2021 Compared to 2020
Provision for (benefit from) income taxes increased by $300 million primarily
due to the deferred China and U.S. tax impact related to our investment in Didi
and the deferred U.S. tax impact related to our investments in Aurora, Grab, and
Zomato.
Loss from Equity Method Investments
Year Ended
December 31, 2020 to 2021 %
(In millions, except percentages) 2020 Change 2021
Loss from equity method investments $ (34) $ (37) 9 %
Percentage of revenue - % - %
2021 Compared to 2020
Loss from equity method investments increased by an immaterial amount.
Supplemental Disclosure Related to Restructuring and Related Charges
During the second quarter of 2020, we initiated and completed certain restructuring activities in order to reduce our overall cost structure in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic and its impact on our business. We also exited the JUMP business and incurred costs related to site closures, asset impairments and write-offs. As a result, during the year endedDecember 31, 2020 , we recognized$362 million in total restructuring and related charges in the consolidated statement of operations. Total restructuring and related charges included$248 million of cash settled charges, primarily for severance and other termination benefits. The remaining costs related to these restructuring activities are expected to be immaterial. These activities were designed to generate an aggregate cost savings of at least$1.0 billion annually when compared to our original fourth quarter 2020 planned cost structure, with the largest component of savings resulting from reductions in workforce. We do not believe these cost-saving measures will impair our ability to conduct any of our key business functions. As ofDecember 31, 2021 , we achieved these aggregate cost savings when compared to our original fourth quarter 2020 planned cost structure. Refer to Note 20 - Restructuring and Related Charges in the notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
Segment Results of Operations
We operate our business as three operating and reportable segments: Mobility, Delivery, and Freight. For additional information about our segments, see Note 14 - Segment Information and Geographic Information in the notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
Revenue
Year Ended December 31, 2020 to 2021 %
(In millions, except percentages) 2020 2021 Change
Mobility $ 6,089 $ 6,953 14 %
Delivery 3,904 8,362 114 %
Freight 1,011 2,132 111 %
All Other (1) 135 8 (94) %
Total revenue $ 11,139 $ 17,455 57 %
(1) Includes historical results of ATG and Other Technology Programs and New
Mobility. Refer to Note 14 - Segment Information and Geographic Information and
Note 19 - Divestitures for further information.
Segment Adjusted EBITDA
Segment Adjusted EBITDA is defined as revenue less the following expenses: cost
of revenue, exclusive of depreciation and amortization, operations and support,
sales and marketing, and general and administrative and research and development
expenses associated with our segments. Segment adjusted EBITDA also excludes
non-cash items, certain transactions that are not indicative of ongoing segment
operating performance and/or items that management does not believe are
reflective of our ongoing core operations.
58
--------------------------------------------------------------------------------
For additional information, see Note 14 - Segment Information and Geographic
Information to our consolidated financial statements included in Part II, Item
8, "Financial Statements and Supplementary Data," of this Annual Report on Form
10-K.
Year Ended December 31, 2020 to 2021 %
(In millions, except percentages) 2020 2021 Change
Mobility $ 1,169 $ 1,596 37 %
Delivery (873) (348) 60 %
Freight (227) (130) 43 %
All Other (1) (461) (11) 98 %
Corporate G&A and Platform R&D (2), (3) (2,136) (1,881) 12 %
Adjusted EBITDA (4) $ (2,528) $ (774) 69 %
(1) Includes historical results of ATG and Other Technology Programs and New
Mobility. Refer to Note 14 - Segment Information and Geographic Information and
Note 19 - Divestitures for further information regarding the sale of our ATG
Business.
(2) Excluding stock-based compensation expense.
(3) Includes costs that are not directly attributable to our reportable segments. Corporate G&A also includes certain shared costs such as finance, accounting, tax, human resources, information technology and legal costs. Platform R&D also includes mapping and payment technologies and support and development of the internal technology infrastructure. Our allocation methodology is periodically evaluated and may change.
(4) See the section titled "Reconciliations of Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measure.
Mobility Segment
For the year ended
Mobility revenue increased primarily attributable to an increase in Mobility Gross Bookings due to increases in Trip volumes as the business recovers from the impacts of COVID-19. Mobility Take Rate was 19.0%, down from 22.9% compared to the same period in 2020, primarily due to an increase in Mobility Driver incentives, as Mobility Driver additions have been outpaced by higher demand recovery in theU.S. and other markets.
Mobility adjusted EBITDA profit increased primarily attributable to an increase in Mobility revenue, partially offset by variable costs attributable to the overall growth of the business.
Delivery Segment
For the year ended
Delivery revenue increased primarily attributable to an increase in Delivery Gross Bookings of 66%, on a constant currency basis, driven by an increase in food delivery orders and higher basket sizes as a result of stay-at-home demand related to COVID-19, combined with continued expansion acrossU.S. and international markets. Take Rate improved to 16.2% from 12.9% compared to the same period in 2020 driven by a decrease in incentive spend combined with an overall improvement in basket sizes. Additionally, we saw an increase in Delivery revenue and Take Rate resulting from an increase in certain Courier payments and incentives that are recorded in cost of revenue, where we are primarily responsible for delivery services and pay Couriers for services provided. Delivery adjusted EBITDA loss improved, primarily attributable to an increase in Delivery revenue, partially offset by a$2.6 billion increase in cost of revenue as well as a$710 million increase in consumer promotions, brand marketing, and employee headcount costs. Freight Segment
For the year ended
Freight revenue increased primarily attributable to the acquisition of Transplace in the fourth quarter of 2021. Additionally, the increase in Freight revenue is also driven by the growth in the number of shippers and carriers on the network combined with an increase in volumes with our top shippers. Freight adjusted EBITDA loss improved, primarily attributable to a$135 million improvement in gross profit as a result of increased load margins, partially offset by an increase in employee headcount costs. 59 --------------------------------------------------------------------------------
All Other
For the year endedDecember 31, 2021 compared to the same period in 2020, All Other revenue decreased$127 million , or 94% and All Other adjusted EBITDA loss improved$450 million , or 98%. All Other revenue and All Other adjusted EBITDA loss improved primarily due to the favorable impact of the sale of our ATG Business in the first quarter of 2021 and the JUMP Divestiture in the second quarter of 2020.
Certain Key Metrics and Non-GAAP Financial Measures
Adjusted EBITDA and revenue growth rates in constant currency are non-GAAP financial measures. For more information about how we use these non-GAAP financial measures in our business, the limitations of these measures, and reconciliations of these measures to the most directly comparable GAAP financial measures, see the section titled "Reconciliations of Non-GAAP Financial Measures."
Monthly Active Platform Consumers. MAPCs is the number of unique consumerswho completed a Mobility or New Mobility ride or received a Delivery order on our platform at least once in a given month, averaged over each month in the quarter. While a unique consumer can use multiple product offerings on our platform in a given month, that unique consumer is counted as only one MAPC. We use MAPCs to assess the adoption of our platform and frequency of transactions, which are key factors in our penetration of the countries in which we operate. [[Image Removed: uber-20211231_g2.jpg]] Trips. We define Trips as the number of completed consumer Mobility or New Mobility rides and Delivery orders in a given period. For example, an UberPOOL ride with three paying consumers represents three unique Trips, whereas an UberX ride with three passengers represents one Trip. We believe that Trips are a useful metric to measure the scale and usage of our platform. [[Image Removed: uber-20211231_g3.jpg]] 60 -------------------------------------------------------------------------------- Gross Bookings. We define Gross Bookings as the total dollar value, including any applicable taxes, tolls, and fees, of: Mobility and New Mobility rides; Delivery orders (in each case without any adjustment for consumer discounts and refunds); Driver and Merchant earnings; Driver incentives; and Freight revenue. Gross Bookings do not include tips earned by Drivers. Gross Bookings are an indication of the scale of our current platform, which ultimately impacts revenue. [[Image Removed: uber-20211231_g4.jpg]] (In millions) Q1 2020 Q2 2020 Q3 2020 Q4 2020
Q1 2021 Q2 2021 Q3 2021 Q4 2021
Mobility$ 10,874 $ 3,046 $ 5,905 $ 6,789 $ 6,773 $ 8,640 $ 9,883 $ 11,340 Delivery 4,683 6,961 8,550 10,050 12,461 12,912 12,828 13,444 Freight 198 212 290 313 302 348 402 1,082 All Other 21 5 - - - - - -
Take Rate is defined as revenue as a percentage of Gross Bookings.
Adjusted EBITDA. See the section titled "Reconciliations of Non-GAAP Financial Measures" for our definition and a reconciliation of net loss attributable toUber Technologies, Inc. to Adjusted EBITDA.
Year Ended
2020 to 2021 %
(In millions, except percentages) 2020 2021 Change
Adjusted EBITDA $ (2,528) $ (774) 69 %
2021 Compared to 2020
Adjusted EBITDA loss improved $1.8 billion , or 69%, primarily attributable to a
$525 million improvement in Delivery Adjusted EBITDA loss, a $427 million
increase in Mobility Adjusted EBITDA, a $255 million decrease in Corporate G&A
and Platform R&D costs as well as the favorable impact of $450 million in our
other business offerings driven by the sale of our ATG Business in the first
quarter of 2021 and the JUMP Divestiture that occurred in the second quarter of
2020.
Reconciliations of Non-GAAP Financial Measures
We collect and analyze operating and financial data to evaluate the health of our business and assess our performance. In addition to revenue, net income (loss), income (loss) from operations, and other results under GAAP, we use Adjusted EBITDA and revenue growth rates in constant currency, which are described below, to evaluate our business. We have included these non-GAAP financial measures because they are key measures used by our management to evaluate our operating performance. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. Our calculation of these non-GAAP financial measures may differ from similarly-titled non-GAAP measures, if any, reported by our peer companies. These non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP.
Adjusted EBITDA
We define Adjusted EBITDA as net income (loss), excluding (i) income (loss) from
discontinued operations, net of income taxes, (ii) net income (loss)
attributable to non-controlling interests, net of tax, (iii) provision for
(benefit from) income taxes, (iv) income (loss) from equity method investments,
(v) interest expense, (vi) other income (expense), net, (vii) depreciation and
amortization, (viii) stock-based compensation expense, (ix) certain legal, tax,
and regulatory reserve changes and settlements, (x) goodwill and asset
61
--------------------------------------------------------------------------------
impairments/loss on sale of assets, (xi) acquisition, financing and divestitures
related expenses, (xii) restructuring and related charges and (xiii) other items
not indicative of our ongoing operating performance, including COVID-19 response
initiatives related payments for financial assistance to Drivers personally
impacted by COVID-19, the cost of personal protective equipment distributed to
Drivers, Driver reimbursement for their cost of purchasing personal protective
equipment, the costs related to free rides and food deliveries to healthcare
workers, seniors, and others in need as well as charitable donations.
We have included Adjusted EBITDA in this Annual Report on Form 10-K because it
is a key measure used by our management team to evaluate our operating
performance, generate future operating plans, and make strategic decisions,
including those relating to operating expenses. Accordingly, we believe that
Adjusted EBITDA provides useful information to investors and others in
understanding and evaluating our operating results in the same manner as our
management team and board of directors. In addition, it provides a useful
measure for period-to-period comparisons of our business, as it removes the
effect of certain non-cash expenses and certain variable charges. To help our
board, management and investors assess the impact of COVID-19 on our results of
operations, we are excluding the impacts of COVID-19 response initiatives
related payments for financial assistance to Drivers personally impacted by
COVID-19, the cost of personal protective equipment distributed to Drivers,
Driver reimbursement for their cost of purchasing personal protective equipment,
the costs related to free rides and food deliveries to healthcare workers,
seniors, and others in need as well as charitable donations from Adjusted
EBITDA. Our board and management find the exclusion of the impact of these
COVID-19 response initiatives from Adjusted EBITDA to be useful because it
allows us and our investors to assess the impact of these response initiatives
on our results of operations.
COVID-19 Response Initiatives
To support those whose earning opportunities have been depressed as a result of COVID-19, as well as communities hit hard by the pandemic, we have announced and implemented several initiatives, including, in particular, payments for financial assistance to Drivers personally impacted by COVID-19, the cost of personal protective equipment distributed to Drivers, Driver reimbursement for their cost of purchasing personal protective equipment, the costs related to free rides and food deliveries to healthcare workers, seniors, and others in need as well as charitable donations. The payments for financial assistance to Drivers personally impacted by COVID-19 and Driver reimbursement for their cost of purchasing personal protective equipment are recorded as a reduction to revenue. The cost of personal protective equipment distributed to Drivers, the costs related to free rides and food deliveries to healthcare workers, seniors, and others in need as well as charitable donations are recorded as an expense in our costs and expenses.
Limitations of Non-GAAP Financial Measures and Adjusted EBITDA Reconciliation
Adjusted EBITDA has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with GAAP. These limitations include the following:
•Adjusted EBITDA excludes certain recurring, non-cash charges, such as depreciation of property and equipment and amortization of intangible assets, and although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
•Adjusted EBITDA excludes certain restructuring and related charges, part of which may be settled in cash;
•Adjusted EBITDA excludes stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy; •Adjusted EBITDA excludes other items not indicative of our ongoing operating performance, including COVID-19 response initiatives related payments for financial assistance to Drivers personally impacted by COVID-19, the cost of personal protective equipment distributed to Drivers, Driver reimbursement for their cost of purchasing personal protective equipment, the costs related to free rides and food deliveries to healthcare workers, seniors, and others in need as well as charitable donations;
•Adjusted EBITDA does not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes;
•Adjusted EBITDA does not reflect the components of other income (expense), net, which primarily includes: interest income; foreign currency exchange gains (losses), net; gain (loss) on business divestitures, net; and unrealized gain (loss) on debt and equity securities, net; and impairment of debt and equity securities; and
•Adjusted EBITDA excludes certain legal, tax, and regulatory reserve changes and settlements that may reduce cash available to us.
62
--------------------------------------------------------------------------------
The following table presents a reconciliation of net loss attributable to
Year Ended December 31,
(In millions) 2020 2021
Adjusted EBITDA reconciliation:
Net loss attributable to Uber Technologies , Inc. $ (6,768) $ (496)
Add (deduct):
Net loss attributable to non-controlling interests, net of tax (20) (74)
Provision for (benefit from) income taxes (192) (492)
Loss from equity method investments 34 37
Interest expense 458 483
Other (income) expense, net 1,625 (3,292)
Depreciation and amortization 575 902
Stock-based compensation expense 827 1,168
Legal, tax, and regulatory reserve changes and settlements (35) 526
Goodwill and asset impairments/loss on sale of assets 317 157
Acquisition, financing and divestitures related expenses 86 102
Accelerated lease costs related to cease-use of ROU assets 102 5
COVID-19 response initiatives 106 54
Gain on lease arrangement, net (5) -
Restructuring and related charges, net 362 -
Legacy auto insurance transfer (1) - 103
Mass arbitration fees - 43
Adjusted EBITDA $ (2,528) $ (774) (1) For further information, refer to Note 1 - Description of Business and Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
Constant Currency
We compare the percent change in our current period results from the corresponding prior period using constant currency disclosure. We present constant currency growth rate information to provide a framework for assessing how our underlying revenue performed excluding the effect of foreign currency rate fluctuations. We calculate constant currency by translating our current period financial results using the corresponding prior period's monthly exchange rates for our transacted currencies other than theU.S. dollar.
Liquidity and Capital Resources
Year Ended December 31,
(In millions) 2020 2021
Net cash used in operating activities $ (2,745) $ (445)
Net cash used in investing activities (2,869) (1,201)
Net cash provided by financing activities 1,379 1,780
Operating Activities
Net cash used in operating activities was $445 million for the year ended
December 31, 2021 , primarily consisting of $570 million of net loss, adjusted
for certain non-cash items, which primarily included $1.7 billion in gain on
business divestitures, $1.2 billion of stock-based compensation expense, $1.1
billion of unrealized gain on debt and equity securities, $413 million of gain
from sale of investments, depreciation and amortization expense of $902 million ,
as well as a $477 million decrease in cash consumed by working capital. The
decrease in cash consumed by working capital and other operating activities was
primarily driven by an increase in accrued expenses and other liabilities, an
increase in our insurance reserves, partially offset by higher accounts
receivable and prepaid expenses and lower operating lease liabilities. Net cash
used in operating activities also reflects a $1.0 billion cash inflow related to
a legacy auto insurance transfer. For additional information on the legacy auto
insurance transfer, see Note 1 - Description of Business and Summary of
Significant Accounting Policies included in Part II, Item 8, "Financial
Statements and Supplementary Data," of this Annual Report on Form 10-K.
63
--------------------------------------------------------------------------------
Net cash used in operating activities was $2.7 billion for the year ended
December 31, 2020 , primarily consisting of $6.8 billion of net loss, adjusted
for certain non-cash items, which primarily included $1.7 billion in impairment
of non-marketable equity securities, $827 million of stock-based compensation
expense, depreciation and amortization expense of $575 million , $404 million in
impairment of goodwill, long-lived assets and other assets, as well as a $393
million decrease in cash consumed by working capital. The decrease in cash
consumed by working capital and other operating activities was primarily driven
by a decrease in our operating lease right-of-use assets, prepaid expenses and
other assets and increase in accrued expenses and other liabilities, partially
offset by lower accounts payable and operating lease liabilities.
Investing Activities
Net cash used in investing activities was$1.2 billion for the year endedDecember 31, 2021 , primarily consisting of$2.3 billion in acquisition of businesses, net of cash acquired,$1.1 billion in purchases of marketable securities,$982 million in purchases of non-marketable equity securities,$297 million in purchases of notes receivable, and$298 million in purchases of property and equipment, partially offset by proceeds from maturities and sales of marketable securities of$2.3 billion , proceeds from the sale of equity method investments of$1.0 billion and proceeds from sale of non-marketable equity securities of$500 million . Net cash used in investing activities was$2.9 billion for the year endedDecember 31, 2020 , primarily consisting of$2.1 billion in purchases of marketable securities,$1.5 billion in acquisition of businesses, net of cash acquired and$616 million in purchases of property and equipment, partially offset by proceeds from maturities and sales of marketable securities of$1.4 billion . Financing Activities Net cash provided by financing activities was$1.8 billion for the year endedDecember 31, 2021 , primarily consisting of$1.5 billion of proceeds from issuance of notes, net of issuance cost,$675 million of proceeds from the issuance and sale of subsidiary preferred stock units, partially offset by$307 million of principal repayment on the non-interest bearing unsecured convertible notes related to the acquisition of Careem ("Careem Notes") and$226 million principal payments on finance leases. Net cash provided by financing activities was$1.4 billion for the year endedDecember 31, 2020 , primarily consisting of$2.6 billion of proceeds from issuance of notes, net of issuance costs and$247 million of proceeds from issuance of subsidiary preferred stock units, partially offset by$891 million of principal repayment on Careem Notes and$527 million of principal repayment on term loan and notes. Other Information As ofDecember 31, 2021 ,$2.2 billion of our$4.3 billion in cash and cash equivalents was held by our foreign subsidiaries. Cash held outsidethe United States may be repatriated, subject to certain limitations, and would be available to be used to fund our domestic operations. Repatriation of funds may result in immaterial tax liabilities. We believe that our existing cash balance inthe United States is sufficient to fund our working capital needs inthe United States . We are in compliance with our debt and line of credit covenants as ofDecember 31, 2021 , including by meeting our reporting obligations. We also believe that our sources of funding and our available line of credit will be sufficient to satisfy our currently anticipated cash requirements including capital expenditures, working capital requirements, collateral requirements, potential acquisitions, potential prepayments of contested indirect tax assessments ("pay-to-play"), and other liquidity requirements through at least the next 12 months. We intend to continue to evaluate and may, in certain circumstances, take preemptive action to preserve liquidity during the COVID-19 pandemic. As the circumstances around the COVID-19 pandemic remain uncertain, we continue to actively monitor the pandemic's impact to us worldwide including our financial position, liquidity, results of operations and cash flows.
Purchase Commitments
We have non-cancelable commitments for network and cloud services, background checks, and other items in the ordinary course of business. These amounts are determined based on the non-cancelable quantities or termination amounts to which we are contractually obligated. As ofDecember 31, 2021 , we had$394 million in non-cancelable commitments, with varying expiration terms throughDecember 15, 2026 .
Critical Accounting Estimates
We believe that the following accounting policies involve a high degree of
judgment and complexity and are critical to understanding and evaluating our
consolidated financial condition and results of our operations. An accounting
policy is considered to be critical if it requires judgment on a significant
accounting estimate to be made based on assumptions about matters that are
uncertain at the time the estimate is made, and if different estimates that
reasonably could have been used, or changes in the accounting estimates that are
reasonably likely to occur periodically, could materially impact the reported
amounts of assets, liabilities, revenue and expenses, and related disclosures in
our audited consolidated financial statements. We have based our estimates on
historical experience and on various other assumptions that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Although we believe that the estimates
we use are reasonable, due to the inherent uncertainty involved in making those
estimates, actual results reported in future periods could differ from those
estimates.
64
-------------------------------------------------------------------------------- We believe that the following critical accounting policies reflect the more significant judgments, estimates and assumptions used in the preparation of our consolidated financial statements. For additional information, see the disclosure included in Note 1 - Description of Business and Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
Revenue Recognition
We derive our revenue principally from service fees paid by Drivers and Merchants for the use of our platform in connection with our Mobility products and Delivery offering provided by Drivers and Merchants to end-users. Our sole performance obligation in the transaction is to connect Drivers and Merchants with end-users to facilitate the completion of a successful ridesharing trip or delivery. Because end-users access our platform for free, except in certain markets, and we have no performance obligation to end-users, end-users are not our customers. Judgment is required in evaluating the presentation of revenue on a gross versus net basis based on whether we control the service provided to the end-user and are the principal in the transaction (gross), or we arrange for other parties to provide the service to the end-user and are the agent in the transaction (net). We have concluded that we are the agent in most markets as we arrange for Drivers and Merchants to provide the service to the end user in Mobility and Delivery transactions. The assessment of whether we are considered the principal or the agent in a transaction could impact the accounting for certain payments and incentives provided to Drivers and end-users and change the timing and amount of revenue recognized. In certain markets, consumers have the option to pay Drivers cash for trips, and we generally collect our service fee from Drivers for these trips by offsetting against any other amounts due to Drivers, including Driver incentives. We have concluded collectability of such amounts is not probable until collected. As such, uncollected service fees for cash trips are not recognized as revenue in our consolidated financial statements until collected.
Driver Incentives
We offer various incentive programs to Drivers. Judgment is required to determine the appropriate classification of these incentives. Incentives provided to customers are recorded as a reduction of revenue if we do not receive a distinct service in exchange or cannot reasonably estimate the fair value of the service received. Incentives offered in exchange for specific services, such as referral services are recorded as sales and marketing expenses.
End-User Discounts and Promotions
We offer discounts and promotions to end-users (that are not customers) to encourage use of our platform. Judgment is required to determine the appropriate classification of these incentives. End-user discounts and promotions are recorded to sales and marketing expenses with the exception of market-wide promotions which are recorded as a reduction of revenue.
Business Combinations
We allocate the fair value of purchase consideration to the tangible assets
acquired, liabilities assumed, and intangible assets acquired based on their
estimated fair values. The excess of the fair value of purchase consideration
over the fair values of these identifiable assets and liabilities is recorded as
goodwill. Such valuations require management to make significant estimates and
assumptions, especially with respect to intangible assets. Significant estimates
in valuing certain intangible assets include, but are not limited to, future
expected cash flows from acquired advertiser, fleet, merchant, and end-user
contracts, acquired technology, and trade names, based on expected future growth
rates and margins, attrition rates, future changes in technology and royalty for
similar brand licenses, useful lives, and discount rates.
Management's estimates of fair value are based upon assumptions believed to be
reasonable, but which are inherently uncertain and unpredictable and, as a
result, actual results may differ from estimates. Allocation of purchase
consideration to identifiable assets and liabilities affects our amortization
expense, as acquired finite-lived intangible assets are amortized over the
useful life, whereas any indefinite lived intangible assets, including goodwill,
are not amortized. During the measurement period, which may be up to one year
from the acquisition date, we may record adjustments to the assets acquired and
liabilities assumed, with the corresponding offset to goodwill. Upon the
conclusion of the measurement period, any subsequent adjustments are recorded to
earnings.
Embedded Derivatives
During 2015, we had issued convertible notes that contain embedded features
subject to derivative accounting. These embedded features are composed of
conversion options that have the economic characteristics of a contingent early
redemption feature settled in shares of our stock rather than cash, because the
total number of shares of our common stock delivered to settle these embedded
features will have a fixed value. These conversion options are bifurcated from
the underlying instrument and accounted for and valued separately from the host
instrument. Embedded derivatives are recognized as derivative liabilities on our
consolidated balance sheet. We measure these instruments at their estimated fair
value and recognize changes in their estimated fair value in other income
(expense), net in our consolidated statement of operations and comprehensive
loss during the period of change.
We value these embedded derivatives as the difference between the estimated
value of these convertible notes with and without the Qualified Initial Public
Offering ("QIPO") conversion option ("QIPO Conversion Option"). The fair value
of these convertible
65
-------------------------------------------------------------------------------- notes with and without the QIPO Conversion Option is estimated utilizing a discounted cash flow model to discount the expected payoffs at various potential QIPO dates to the valuation date. The key inputs to the valuation model include the probability of a QIPO occurring at various points in time and the discount yield, which was derived by imputing the fair value as equal to the face value on the issuance date of these convertible notes. The discount rate is updated during each period to reflect the yield of a comparable instrument issued as of the valuation date. Upon closing of the IPO inMay 2019 , holders of these convertible notes elected to convert all outstanding notes into shares of common stock. For additional information, refer to Note 11 - Stockholders' Equity included in Part II, Item 8, "Financial Statements and Supplementary Data," of this Annual Report on Form 10-K.
We hold investments in privately held companies in the form of equity securities and debt securities without readily determinable fair values and in which we do not have a controlling interest or significant influence. Investments in equity securities without readily determinable fair values are initially recorded at cost and are subsequently adjusted to fair value for impairments and price changes from observable transactions in the same or a similar security from the same issuer. Investments in material available-for-sale debt securities are recorded initially at fair value and subsequently remeasured to fair value at each reporting date with the changes in fair value recognized in other comprehensive income (loss), net of tax. We may elect the fair value option for financial instruments and account for investments in debt and equity securities at fair value with changes reported in net income (loss) from continuing operations. Investments in privately held equity and debt securities are valued using significant unobservable inputs or data in inactive markets. This valuation requires judgment due to the absence of market prices and inherent lack of liquidity and are classified as Level 3 in the fair value hierarchy. In determining the estimated fair value of our investments in privately held companies, we utilize the most recent data available including observed transactions such as equity financing transactions of the investees and sales of the existing shares of the investees' securities. In addition, the determination of whether an observed transaction is similar to the equity and debt securities held by us requires significant management judgment based on the rights and preferences of the securities. We assess our investment portfolio of privately held equity and debt securities quarterly for impairment. The impairment analysis for investments in equity securities includes a qualitative analysis of factors including the investee's financial performance, industry and market conditions, and other relevant factors. If an equity investment is considered to be impaired we will establish a new carrying value for the investment and recognize an impairment loss through our consolidated statement of operations. Investments in debt securities are evaluated for impairment quarterly based on whether its fair value has declined below its amortized cost. In circumstances where we intend to sell, or are more likely than not required to sell the security before it recovers its amortized cost basis, the difference between the fair value and amortized cost is recognized as a loss in the consolidated financial statement of operations, with a corresponding write-down of the security's amortized cost. In circumstances where neither condition exists, we then evaluate whether a decline is due to credit-related factors. The factors considered in determining whether a credit loss exists can include the extent to which fair value is less than the amortized cost basis, changes in the credit quality of the underlying loan obligors, credit ratings actions, as well as other factors. To determine the portion of a decline in fair value that is credit-related, we compare the present value of the expected cash flows of the security discounted at the security's effective interest rate to the amortized cost basis of the security. A credit-related impairment is limited to the difference between fair value and amortized cost, and recognized as an allowance for credit loss on the consolidated balance sheet with a corresponding adjustment to net income (loss). Any remaining decline in fair value that is non-credit related is recognized in other comprehensive income (loss), net of tax. Improvements in expected cash flows due to improvements in credit are recognized through reversal of the credit loss and corresponding reduction in the allowance for credit loss.
Equity Method Investments
We account for investments in the common stock or in-substance common stock of
entities that provide us with the ability to exercise significant influence, but
not a controlling financial interest, using the equity method. Investments
accounted for under the equity method are initially recorded at cost.
Subsequently, we recognize through the consolidated statements of operations,
and as an adjustment to the investment balance, our proportionate share of the
investee entities' net income or loss, and the amortization of basis
differences. In accounting for these investments, we record our share of the
entities' net income or loss one quarter in arrears. Equity method investments
for which the fair value option is elected are measured at fair value on a
recurring basis with changes in fair value reflected in earnings.
We review our equity method investments for impairment whenever events or
changes in business circumstances indicate that the carrying value of the
investment may not be fully recoverable. Qualitative and quantitative factors
considered as indicators of a potential impairment include financial results and
operating trends of the investees, implied values in transactions of the
investee's securities, severity and length of decline in value, and our
intention for holding the investment, among other factors. If an impairment is
determined to be other-than-temporary, the fair value of the impaired investment
would have to be determined and an impairment charge recorded for the difference
between the fair value and the carrying value of the investment. The fair value
determination, particularly for investments in privately held companies,
requires significant judgment to determine appropriate estimates and
66
--------------------------------------------------------------------------------assumptions. Changes in these estimates and assumptions could affect the calculation of the fair value of the investments and the determination of the impairment charges.
Goodwill Impairment Assessment
We review goodwill for impairment annually (in the fourth quarter) and whenever events or changes in circumstances indicate that goodwill might be impaired. We make certain judgments and assumptions to determine our reporting units and in allocating shared assets and liabilities to determine the carrying values for each of our reporting units. Determination of reporting units is based on a judgmental evaluation of the level at which our segment managers review financial results, evaluate performance, and allocate resources. Judgment in the assessment of qualitative factors of impairment include, among other factors: financial performance; legal, regulatory, contractual, political, business, and other factors; entity specific factors; industry and market considerations, macroeconomic conditions, and other relevant events and factors affecting the reporting unit. To the extent we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying value, a quantitative test is then performed. Performing a quantitative goodwill impairment test includes the determination of the fair value of a reporting unit and involves significant estimates and assumptions. These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables.
Loss Contingencies
We are involved in legal proceedings, claims, and regulatory, indirect tax examinations, or government inquiries and investigations that may arise in the ordinary course of business. Certain of these matters include speculative claims for substantial or indeterminate amounts of damages. We record a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be reasonably estimated, we disclose the possible loss in the accompanying notes to the consolidated financial statements. We review the developments in our contingencies that could affect the amount of the provisions that have been previously recorded, and the matters and related reasonably possible losses disclosed. We make adjustments to our provisions and changes to our disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount of loss. These estimates have been based on our assessment of the facts and circumstances at each balance sheet date and are subject to change based on new information and future events. The outcomes of litigation, indirect tax examinations and investigations are inherently uncertain. Therefore, if one or more of these matters were resolved against us for amounts in excess of management's expectations, our results of operations, financial condition, or cash flows, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected.
Income Taxes
We are subject to income taxes inthe United States and foreign jurisdictions. We account for income taxes using the asset and liability method. The establishment of deferred tax assets from intra-entity transfers of intangible assets requires management to make significant estimates and assumptions to determine the fair value of such intangible assets. Significant estimates in valuing intangible assets may include, but are not necessarily limited to, internal revenue and expense forecasts, the estimated life of the intangible assets, comparable transaction values, and/or discount rates. The discount rates used to discount expected future cash flows to present value are derived from a weighted-average cost of capital analysis and are adjusted to reflect the inherent risks related to the cash flow. Although we believe the assumptions and estimates we have made are reasonable and appropriate, they are based, in part, on historical experience, internal and external comparable data and are inherently uncertain. Unanticipated events and circumstances may occur that could affect either the accuracy or validity of such assumptions, estimates or actual results. We account for uncertainty in tax positions by recognizing a tax benefit from uncertain tax positions when it is more-likely-than-not that the position will be sustained upon examination. Evaluating our uncertain tax positions and determining our provision for income taxes are inherently uncertain and require making judgments, assumptions, and estimates. While we believe we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences may impact the provision for income taxes and the effective tax rate in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves as well as the related net interest and penalties. In addition, we are subject to the continuous examination of our income tax returns by theIRS and other tax authorities which may assert assessments against us. We regularly assess the likelihood of adverse outcomes resulting from these examinations and assessments to determine the adequacy of our provision for income taxes. 67 --------------------------------------------------------------------------------
Insurance Reserves
We use a combination of third-party insurance and self-insurance mechanisms, including a wholly-owned captive insurance subsidiary, to provide for the potential liabilities for certain risks, including auto liability, uninsured and underinsured motorist, auto physical damage, general liability, and workers' compensation. The insurance reserves is an estimate of our potential liability for unpaid losses and loss adjustment expenses, which represents the estimate of the ultimate unpaid obligation for risks retained by us and includes an amount for case reserves related to reported claims and an amount for losses incurred but not reported as of the balance sheet date. The estimate of the ultimate unpaid obligation utilizes generally accepted actuarial methods applied to historical claim and loss experience. In addition, we use assumptions based on actuarial judgment related to claim and loss development patterns and expected loss costs, which consider frequency trends, severity trends, and relevant industry data. These reserves are continually reviewed and adjusted as experience develops and new information becomes known. Adjustments, if any, relating to accidents that occurred in prior years are reflected in the current year results of operations. All estimates of ultimate losses and allocated loss adjustment expenses, and of resulting reserves, are subject to inherent variability caused by the nature of the insurance claim settlement process. Such variability is increased for us due to limited historical experience and the nature of the coverage provided. Actual results depend upon the outcome of future contingent events and can be affected by many factors, such as claim settlement processes and changes in the economic, legal, and social environments. As a result, the net amounts that will ultimately be paid to settle the liability, and when these amounts will be paid, may vary in the near term from the estimated amounts.
While management believes that the insurance reserve amount is adequate, the ultimate liability may be in excess of, or less than, the amount provided.
Stock-Based Compensation
We have granted stock-based awards consisting primarily of stock options, restricted common stock, RSUs, warrants, and SARs to employees, members of our board of directors and non-employees. The substantial majority of our stock-based awards have been made to employees. The majority of our outstanding RSUs, as well as certain options, SARs, and shares of restricted common stock, contain a service-based vesting condition. A small portion of the awards contains service-based vesting condition as well as performance-based vesting condition and/or market-based vesting condition. The service-based vesting condition for the majority of these awards is satisfied over four years. The performance-based vesting condition is satisfied upon meeting predetermined targets of certain financial and operation metrics. The market-based vesting condition is satisfied upon reaching predetermined targets of fully diluted equity values. We account for stock-based employee compensation under the fair value recognition and measurement provisions, in accordance with applicable accounting standards, which requires compensation expense for the grant-date fair value of stock-based awards to be recognized over the requisite service period. We account for forfeitures when they occur. We have elected to use the Black-Scholes option-pricing model to determine the fair value of stock options, warrants, and SARs on the grant date. The Black-Scholes option-pricing model requires certain subjective inputs and assumptions, including the fair value of our common stock, the expected term, risk-free interest rates, expected stock price volatility, and expected dividend yield of our common stock.
These assumptions used in the Black-Scholes option-pricing model, other than the fair value of our common stock, are estimated as follows:
•Expected term. We estimate the expected term based on the simplified method for employees and on the contractual term for non-employees.
•Risk-free interest rate. The risk-free interest rate is based on the
•Expected volatility. We estimate the volatility of our common stock on the date of grant based on the weighted-average historical stock price volatility of our own common shares within the same length of period as the expected term. Where, in some cases, our common share trading history is shorter than the expected term, we consider comparable publicly-traded companies in our industry group.
•Expected dividend yield. Expected dividend yield is zero percent, as we have not paid and do not anticipate paying dividends on our common stock.
We continue to use judgment in evaluating the expected volatility and expected term utilized in our stock-based compensation expense calculation on a prospective basis. As we continue to accumulate additional data related to our common stock, we may refine our estimates of expected volatility and expected term, which could materially impact our future stock-based compensation expense.
Recent Accounting Pronouncements
See Note 1 - Description of Business and Summary of Significant Accounting
Policies, to the consolidated financial statements included in Part II, Item 8,
"Financial Statements and Supplementary Data," of this Annual Report on Form
10-K.
68
--------------------------------------------------------------------------------
© Edgar Online, source
