The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in our 2019 Annual Report on Form 10-K. In addition to 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 Part II, 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 Quarterly Report on Form 10-Q. 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, merchants and food delivery services, public transportation networks, e-bikes, e-scooters and other personal mobility options. 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 autonomous driving vehicle solutions to consumers, networks of vertical take-off and landing vehicles and new solutions to solve everyday problems. COVID-19 InMarch 2020 , theWorld Health Organization declared the outbreak of the coronavirus disease ("COVID-19") a pandemic. The COVID-19 pandemic has rapidly changed market and economic conditions globally, impacting Drivers, Delivery People, 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, "shelter at home" orders, restrictions on travel, limitations on social or public gatherings, and other social distancing 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. The significant adverse changes in the economic and market conditions resulting from COVID-19 triggered the recognition of pre-tax impairment charges of$2.1 billion in the first quarter of 2020, principally relating to our investments in Didi and Grab. For additional information on impairment charges, refer to Note 3 - Investments and Fair Value Measurement and Note 6 -Goodwill , Intangible Assets and Long-Lived Assets in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q. COVID-19 Response Initiatives We continue to prioritize the health and safety of our consumers, Drivers and Merchants and the communities we serve. As one of the world's largest platforms for work, we continue to believe that 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. 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 UberPOOL, our shared Mobility offering, globally and implemented "leave at door" delivery options for Delivery offerings. Additionally, we have asked that all employeeswho are able to do so work remotely. In addition, to support those whose earning opportunities have been depressed as a result of the COVID-19 pandemic, as well as communities hit hard during this unprecedented period, we announced and implemented several initiatives during the first quarter of 2020, including a financial assistance program, for Driverswho are impacted by the pandemic, as well as personal protective equipment disbursement. 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, 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 II, Item 1A "Risk Factors" in this Quarterly Report on Form 10-Q. 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 50 -------------------------------------------------------------------------------- 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. The complaint alleges drivers are misclassified, and seeks 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 voted on Proposition 22, a state ballot initiative that provides a framework for drivers that use platforms like ours for independent work. Based on the unofficial results published by theCalifornia Secretary of State at the time of this filing, Proposition 22 was approved byCalifornia voters, which means that the preliminary injunction will not go into effect and Drivers will be able to maintain their status as independent contractors underCalifornia law and we and our competitors will be required to comply with the provisions of Proposition 22. To comply with Proposition 22, which we expect to go into effect in the fourth quarter of 2020, we 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. If, as a result of legislation or judicial decisions, we are required to classify Drivers as employees, 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. 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 our significant and critical accounting policies in the section titled "Critical Accounting Policies and Estimates" included in Part I, Item 2 of this Quarterly Report on Form 10-Q and Note 1 in the section titled "Notes to the Consolidated Financial Statements" included in Part I, Item 1 of this Quarterly Report on Form 10-Q as well as our Annual Report on Form 10-K for the year endedDecember 31, 2019 . Financial and Operational Highlights
Three Months Ended
% Change (Constant Currency (In millions, except percentages) 2019 2020 % Change (1)) Monthly Active Platform Consumers ("MAPCs") (2) 103 78 (24) % Trips (2) 1,770 1,150 (35) % Gross Bookings (2)$ 16,465 $ 14,745 (10) % (8) % Revenue$ 3,813 $ 3,129 (18) % (17) % Adjusted Net Revenue (1), (2)$ 3,533 $ 2,813 (20) % (19) % Net loss attributable toUber Technologies, Inc. (3)$ (1,162) $ (1,089) 6 % Mobility Adjusted EBITDA$ 631 $ 245 (61) % Delivery Adjusted EBITDA$ (316) $ (183) 42 % Adjusted EBITDA (1), (2)$ (585) $ (625) (7) % (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" for more information. (3) Net loss attributable toUber Technologies, Inc. includes stock-based compensation expense of$401 million and$183 million in the third quarter of 2019 and 2020. Highlights for the Third Quarter 2020 In the third quarter of 2020, we continued to show signs of the business recovering from the impacts of COVID-19. Our MAPCs were 78 million, adding 23 million, or growing 42%, quarter-over-quarter. 51 -------------------------------------------------------------------------------- Overall Gross Bookings declined to$14.7 billion in the third quarter of 2020, or 8%, on a constant currency basis, compared to the same period in 2019. Mobility Gross Bookings declined 50% year-over-year, on a constant currency basis, but improved 94% from the previous quarter. Delivery Gross Bookings grew 135% year-over-year, from the second quarter growth of 113%, on a constant currency basis, and outpaced Delivery Trip growth, as we saw a 36% increase in basket sizes globally from continued stay-at-home order demand related to COVID-19. Revenue and Adjusted Net Revenue was$3.1 billion and$2.8 billion , respectively, with a Take Rate of 19.1% in the third quarter of 2020, improving 0.3%, compared to the second quarter of 2020. Net loss attributable toUber Technologies, Inc. was$1.1 billion , which included$183 million of stock-based compensation expense. Adjusted EBITDA loss was$(625) million , with Mobility Adjusted EBITDA profit of$245 million , despite Mobility Gross Bookings decline of 50%, on a constant currency basis. Additionally, Delivery Adjusted EBITDA margin as a percentage of Delivery Revenue improved to (12.6%) from (49.0%), compared the same period in 2019, and Delivery Adjusted EBITDA margin as a percentage of Delivery Adjusted Net Revenue improved to (16.1%) from (80.6%), compared to the same period in 2019. We ended the quarter with$7.3 billion in unrestricted cash, cash equivalents, and short-term investments. Significant Developments for the Third Quarter 2020 Cornershop OnJuly 6, 2020 , we closed on a purchase agreement to acquireCornershop Global LLC ("CS-Global"), resulting in anUber direct capital contribution of$200 million to CS-Global and a payment of$179 million to tendering shareholders, paid in a combination of cash andUber common stock. In exchange for the consideration transferred, we received 55% of the outstanding membership interests. The agreement was accounted for as a business combination, resulting in the recognition of$370 million in goodwill in our Delivery segment and$122 million in intangible assets. For additional information, see Note 16 - Business Combinations in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Routematch OnJuly 14, 2020 , we acquired 100% of the equity ofRoutematch Holdings, Inc. ("Routematch"). The acquisition was accounted for as a business combination, resulting in the recognition of$89 million in goodwill in our Mobility segment. For additional information, see Note 16 - Business Combinations in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Debt Offering InSeptember 2020 , we issued eight-year notes with an aggregate principal amount of$500 million due onJanuary 15, 2028 (the "2028 Senior Notes") in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. For additional information, see Note 7 - Long-Term Debt and Revolving Credit Arrangements in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Recent Developments Sale of European Freight Business OnOctober 5, 2020 , we completed the divestiture of the European Freight Business to sennder GmbH ("Sennder") in exchange for Series C preferred shares that represent 8% of Sennder's total capital on a fully diluted basis. As ofSeptember 30, 2020 , the carrying values of the assets and liabilities of the European Freight Business were not material.Greenbriar Equity Group, L.P. Investment in Freight OnOctober 1, 2020 , we entered into a preferred stock purchase agreement with affiliates ofGreenbriar Equity Group, L.P. ("Greenbriar"). Pursuant to the preferred stock purchase agreement, Greenbriar agreed to invest an aggregate of$500 million inUber Freight Holding Corporation ("Freight Holding "), the holding company for ourUber Freight business, in exchange for Series A convertible preferred stock ofFreight Holding collectively representing approximately a 15% ownership interest inFreight Holding on a fully diluted basis. The aggregate$500 million investment will occur over numerous closings, subject to customary closing conditions. For additional information, see Note 19 - Subsequent Events in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. 52 -------------------------------------------------------------------------------- Joint Venture Agreement with SK Telecom InOctober 2020 , we entered into a joint venture agreement with SK Telecom Co., LTD. ("SK Telecom "). Pursuant to this agreement, we and SK Telecom's mobility business ("Mobility Company "), which will be spun out of SK Telecom prior to the closing of the joint venture, will form a joint venture (the "Business") inSouth Korea , focused on the business of e-hailing of passenger transportation (including taxis and limousines). For additional information, see Note 19 - Subsequent Events in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Redemption of 2023 Senior Notes OnOctober 21, 2020 , the net proceeds from the 2028 Senior Notes, along with cash on hand, were used to redeem all of our outstanding 2023 Senior Notes. The redemption of the 2023 Senior Notes was for substantially identical 2028 Senior Notes. Following the redemption, there were no 2023 Senior Notes outstanding. Legal and Regulatory Developments California State Assembly Bill 5 ("AB5") and Proposition 22 AB5 is a recently enacted statute that codifies a test to determine whether a worker is an employee underCalifornia law. The test is referred to as the "ABC" test, and was originally handed down by theCalifornia Supreme Court in Dynamex Operations v.Superior Court in 2018. Under theABC test, workers performing services for a hiring entity are considered employees unless the hiring entity can demonstrate three things: the worker (A) is free from the hiring entity's control, (B) performs work that is outside the usual course of the hiring entity's business, and (C) customarily engages in the independent trade, work or type of business performed for the hiring entity. AB5 went into effect inJanuary 2020 . As disclosed previously, theCalifornia Attorney General, in conjunction with the city attorneys forSan Francisco ,Los Angeles andSan Diego , filed a complaint under AB5 that alleges that drivers are misclassified, and seeks an injunction and monetary damages related to the alleged competitive advantage caused by the alleged misclassification of drivers. Following a hearing on the matter, the Court issued a preliminary injunction enjoiningUber and Lyft from classifying drivers as independent contractors during the pendency of the lawsuit. We unsuccessfully appealed this injunction to theCalifornia Court of Appeal , which affirmed the lower court's ruling and held that we must comply with the preliminary injunction order. InNovember 2020 ,California voters voted on Proposition 22, aCalifornia state ballot initiative that provides a framework for drivers that use platforms like ours for independent work. Proposition 22: •establishes that app-based drivers are independent contractors and not employees •establishes a guaranteed minimum earnings floor for drivers; •provides for occupational/accident insurance for injury protection; •provides a subsidy for healthcare expenditures of app-based drivers; and •establishes due process provisions and protection against discrimination and harassment for app-based drivers Based on the unofficial results published by theCalifornia Secretary of State as of the date of this filing, Proposition 22 has been approved byCalifornia voters, which means that theCalifornia Attorney General's preliminary injunction will not go into effect and Drivers will be able to maintain their status as independent contractors underCalifornia law and we and our competitors will be required to comply with the provisions of Proposition 22. For a discussion of risk factors related to how miscalssification challenges may impact our business, result of operations, financial position, operating condition and cash flows, see the risk factor titled "-Our business would be adversely affected if Drivers were classified as employees" in the section titled "Risk Factors" included in Part II, Item 1A of this Quarterly Report on Form 10-Q. 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. During the first quarter of 2020, we began charging end-users a fee for Mobility and Delivery services in certain markets. In these transactions, we enter into a Master Services Agreement ("MSA") with the end-user to use the platform for Mobility and Delivery Services, in exchange for a fee. The combination of the MSA and the individual transaction request establishes enforceable rights and obligations for each transaction and end-users are identified as our customers in these transactions. While our contracts and our previously disclosed accounting policy for Mobility Drivers and restaurants remains unchanged, we now subcontract with Delivery People to provide delivery services to end-users. Revenue from restaurants, Mobility Drivers, and end-users is recognized separately, while costs associated with payments to Delivery People are recorded as cost of revenue. 53 -------------------------------------------------------------------------------- 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 Policies and Estimates - Revenue Recognition," "Note 1 - Description of Business and Summary of Significant Accounting Policies - Revenue Recognition," and "Note 2 - Revenue" to our audited consolidated financial statements included in our Annual Report Form 10-K for the year endedDecember 31, 2019 and Note 1 - Description of Business and Summary of Significant Accounting Policies in this Quarterly Report in Form 10-Q. Cost of Revenue, Exclusive of Depreciation and Amortization Cost of revenue, exclusive of depreciation and amortization, consists primarily of insurance costs, credit card processing fees, hosting and co-located data center expenses, mobile device and service expenses, amounts related to fare chargebacks and other credit card losses, excess Driver incentives, costs incurred for certain Delivery transactions where we are primarily responsible for delivery services and pay Delivery People for services provided, and costs incurred with carriers for Freight transportation. Insurance expenses include coverage for auto liability, general liability, uninsured and underinsured motorist liability, and auto physical damage related to our Mobility and Delivery offerings. Excess Driver incentives are primarily related to our Delivery offerings. 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. Operations and Support Operations and support expenses consist primarily of compensation expenses, including stock-based compensation to employeeswho support operations in cities, Driver operations employees, community management employees, and platform user support representatives, as well as costs for allocated overhead and those associated with Driver background checks. 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 consist primarily of compensation expenses, including stock-based compensation to sales and marketing employees, advertising expenses, expenses related to consumer acquisition and retention, including consumer discounts, rider facing loyalty programs, promotions, refunds, and credits, Driver referrals, and allocated overhead. 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 consist primarily of compensation expenses for engineering, product development, and design employees, including stock-based compensation, expenses associated with ongoing improvements to, and maintenance of, our platform offerings, and ATG and Other Technology Programs development expenses, as well as allocated overhead. 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, as well as ATG and Other Technology Programs, and other research and development programs. General and Administrative General and administrative expenses consist primarily of compensation expenses, including stock-based compensation, for executive management and administrative employees, including finance and accounting, human resources, and legal, as well as facilities and general corporate, and director and officer insurance expenses. General and administrative expenses also include legal, tax, and regulatory reserve changes and 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 find efficiencies in our internal support functions. Depreciation and Amortization Depreciation and amortization consists of all depreciation and amortization expenses associated with our property and equipment and acquired intangible assets. Depreciation includes expenses associated with buildings, site improvements, computer and network 54 -------------------------------------------------------------------------------- equipment, leased vehicles, furniture, fixtures, and dockless e-bikes, 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. Other Income (Expense), Net Other income (expense), net primarily includes the following items: •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 (loss) on business divestitures, net. •Unrealized gain (loss) on debt and equity securities, net, which consists primarily of gains (losses) from fair value adjustments relating to our non-marketable securities. •Allowance reversal (impairment) of debt and equity securities. •Change in fair value of embedded derivatives, which consists primarily of gains and losses on embedded derivatives related to our Convertible Notes until their extinguishment in connection with our IPO. •Gain on extinguishment of convertible notes and settlement of derivatives. •Other, net, which consists primarily of changes in the fair value of warrants and income from forfeitures of warrants. 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, use of foreign tax credits, changes in the valuation of our deferred tax assets, and liabilities 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. 55 --------------------------------------------------------------------------------
Results of Operations The following table summarizes our condensed consolidated statements of operations for each of the periods presented (in millions):
Three Months Ended September Nine Months Ended September 30, 30, 2019 2020 2019 2020 Revenue$ 3,813 $ 3,129 $ 10,078 $ 8,913 Costs and expenses: Cost of revenue, exclusive of depreciation and amortization shown separately below 1,860 1,614 5,281 4,652 Operations and support 498 365 1,796 1,450 Sales and marketing 1,113 924 3,375 2,545 Research and development 755 493 4,228 1,722 General and administrative 591 711 2,652 2,135 Depreciation and amortization 102 138 371 395 Total costs and expenses 4,919 4,245 17,703 12,899 Loss from operations (1,106) (1,116) (7,625) (3,986) Interest expense (90) (112) (458) (340) Other income (expense), net 49 151 707 (1,688) Loss before income taxes and loss from equity method investments (1,147) (1,077) (7,376) (6,014) Provision for (benefit from) income taxes 3 23 20 (215) Loss from equity method investments (9) (8) (25) (27) Net loss including non-controlling interests (1,159) (1,108) (7,421) (5,826) Less: net income (loss) attributable to non-controlling interests, net of tax 3 (19) (11) (27) Net loss attributable toUber Technologies, Inc. $ (1,162) $ (1,089) $ (7,410) $ (5,799) 56
-------------------------------------------------------------------------------- The following table sets forth the components of our condensed consolidated statements of operations for each of the periods presented as a percentage of revenue (1): Three Months Ended September 30, Nine Months Ended September 30, 2019 2020 2019 2020 Revenue 100 % 100 % 100 % 100 % Costs and expenses: Cost of revenue, exclusive of depreciation and amortization shown separately below 49 % 52 % 52 % 52 % Operations and support 13 % 12 % 18 % 16 % Sales and marketing 29 % 30 % 33 % 29 % Research and development 20 % 16 % 42 % 19 % General and administrative 15 % 23 % 26 % 24 % Depreciation and amortization 3 % 4 % 4 % 4 % Total costs and expenses 129 % 136 % 176 % 145 % Loss from operations (29) % (36) % (76) % (45) % Interest expense (2) % (4) % (5) % (4) % Other income (expense), net 1 % 5 % 7 % (19) % Loss before income taxes and loss from equity method investments (30) % (34) % (73) % (67) % Provision for (benefit from) income taxes - % 1 % - % (2) % Loss from equity method investments - % - % - % - % Net loss including non-controlling interests (30) % (35) % (74) % (65) % Less: net income (loss) attributable to non-controlling interests, net of tax - % (1) % - % - % Net loss attributable toUber Technologies, Inc. (30) % (35) % (74) % (65) %
(1) Totals of percentage of revenues may not foot due to rounding.
The following discussion and analysis is for the three and nine months ended
Three Months Ended September Nine Months Ended September 30, 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Mobility$ 2,895 $ 1,365 (53) %$ 7,689 $ 4,624 (40) % Delivery 645 1,451 125 % 1,776 3,481 96 % Freight 218 288 32 % 512 698 36 % ATG and Other Technology Programs (1) 17 25 47 17 75 ** All Other (2) 38 - ** 84 35 (58) Total revenue$ 3,813 $ 3,129 (18) %$ 10,078 $ 8,913 (12) % (1) For the three months endedSeptember 30, 2019 , consists of$17 million of collaboration revenue fromToyota . For the three and nine months endedSeptember 30, 2020 , consists of$25 million and$75 million , respectively, of collaboration revenue fromToyota recognized in the three and nine months endedSeptember 30, 2020 . For additional information, see Note 15 - Non-Controlling Interests in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. (2) In the second quarter of 2020, Other Bets was no longer deemed an operating or reportable segment and renamed All Other beginning in the third quarter of 2020. The historical results of the former Other Bets segment are included within All Other. For additional information, see Note 12 - Segment Information and Geographic Information in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. ** Percentage not meaningful. 57 -------------------------------------------------------------------------------- Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Revenue decreased$684 million , or 18%, primarily attributable to a decline in Gross Bookings of 8%, on a constant currency basis. The decrease in Gross Bookings was primarily driven by a decline in Mobility Gross Bookings of 50%, on a constant currency basis, due to adverse impacts of COVID-19. The decrease was partially offset by Delivery Gross Bookings growth of 135%, 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 our international markets. Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Revenue decreased$1.2 billion , or 12%, primarily attributable to a decline in Gross Bookings of 11%, on a constant currency basis. The decrease in Gross Bookings was primarily driven by a decline in Mobility Gross Bookings of 43%, on a constant currency basis, due to adverse impacts of COVID-19. The decrease was partially offset by Delivery Gross Bookings growth of 103%, 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 our international markets. Additionally, we had a one-time Driver appreciation award of$298 million recorded in the second quarter of 2019, that was not incurred in the same period in 2020. Cost of Revenue, Exclusive of Depreciation and Amortization Three Months Ended September Nine Months Ended September 30, 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Cost of revenue, exclusive of depreciation and amortization$ 1,860 $ 1,614 (13) %$ 5,281 $ 4,652 (12) % Percentage of revenue 49 % 52 % 52 % 52 % Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Cost of revenue, exclusive of depreciation and amortization, decreased$246 million , or 13%, mainly due to a$612 million decrease in Mobility driven by COVID-19 related volume declines primarily resulting in lower insurance costs. This decrease was partially offset by a$279 million increase in Delivery, primarily related to a$157 million increase in Delivery People payments and incentives in certain markets and an overall$57 million increase in Excess Driver incentives. Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Cost of revenue, exclusive of depreciation and amortization, decreased$629 million , or 12%, mainly due to an$1.5 billion decrease in Mobility driven by COVID-19 related volume declines primarily resulting in lower insurance costs. This decrease was partially offset by a$628 million increase in Delivery, primarily related to a$318 million increase in Delivery People payments and incentives in certain markets, combined with a$157 million increase in Freight carrier payments and an overall$114 million increase in Excess Driver incentives. Operations and Support Nine Months Ended September Three Months Ended September 30, 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Operations and support $ 498$ 365 (27) %$ 1,796 $ 1,450 (19) % Percentage of revenue 13 % 12 % 18 % 16 % Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Operations and support expenses decreased$133 million , or 27%, primarily attributable to an$83 million decrease in employee headcount costs,$28 million decrease in external contractor expenses and a$10 million decrease in stock-based compensation expense. Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Operations and support expenses decreased$346 million , or 19%, primarily attributable to a$379 million decrease in stock-based compensation mainly related to RSUs with a performance condition satisfied upon our IPO in 2019 and a$53 million decrease in external contractor expenses, partially offset by a$182 million increase in restructuring and related charges. 58 --------------------------------------------------------------------------------
Sales and Marketing
Three Months Ended September Nine Months Ended September 30, 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Sales and marketing$ 1,113 $ 924 (17) %$ 3,375 $ 2,545 (25) % Percentage of revenue 29 % 30 % 33 % 29 % Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Sales and marketing expenses decreased$189 million , or 17%, primarily attributable to a decrease in consumer discounts, rider facing loyalty expense, promotions, credits and refunds of$115 million to$541 million compared to$656 million in the same period in 2019. In addition, consumer advertising decreased$23 million and stock-based compensation expense decreased$5 million . Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Sales and marketing expenses decreased$830 million , or 25%, primarily attributable to a decrease in consumer discounts, rider facing loyalty expense, promotions, credits and refunds of$297 million to$1.5 billion compared to$1.8 billion in the same period in 2019, a decrease of$260 million in consumer advertising and other marketing programs, as well as a$194 million decrease in stock-based compensation mainly related to RSUs with a performance condition satisfied upon our IPO in 2019. Research and Development Nine Months Ended September Three Months Ended September 30, 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Research and development $ 755$ 493 (35) %$ 4,228 $ 1,722 (59) % Percentage of revenue 20 % 16 % 42 % 19 % Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Research and development expenses decreased$262 million , or 35%, primarily attributable to a$160 million decrease in stock-based compensation expense and a$101 million decrease in employee headcount costs. Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Research and development expenses decreased$2.5 billion , or 59%, primarily attributable to a$2.5 billion decrease in stock-based compensation expense mainly related to RSUs with a performance condition satisfied upon our IPO in 2019, partially offset by an$86 million increase in restructuring and related charges. General and Administrative Nine Months Ended September Three Months Ended September 30, 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change General and administrative $ 591$ 711 20 %$ 2,652 $ 2,135 (19) % Percentage of revenue 15 % 23 % 26 % 24 % Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 General and administrative expenses increased$120 million , or 20%, primarily attributable to$80 million of accelerated lease expense and$74 million in asset impairments, both related to exiting certain leased offices, partially offset by a$43 million decrease in stock-based compensation expense and a$31 million decrease in employee headcount costs. Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 General and administrative expenses decreased$517 million , or 19%, primarily attributable to a$708 million decrease in stock-based compensation expense and a net$296 million decrease in legal, tax, and regulatory reserve changes and settlements, partially offset by$193 million 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, an$86 million increase in restructuring and related charges,$80 million attributable to accelerated lease expense during the third quarter of 2020 and$74 million in asset impairments. 59 --------------------------------------------------------------------------------
Depreciation and Amortization
Three Months Ended September 30, Nine Months Ended September 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Depreciation and amortization $ 102$ 138 35 % $ 371$ 395 6 % Percentage of revenue 3 % 4 % 4 % 4 % Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Depreciation and amortization expenses increased$36 million , or 35%, primarily attributable to increase in depreciation of leased servers and additional amortization expenses related to newly acquired Careem intangible assets partially offset by a decrease in depreciation of data center assets. Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Depreciation and amortization expenses increased$24 million , or 6%, primarily attributable to an increase in leased server depreciation and additional amortization expenses related to newly acquired Careem intangible assets, partially offset by a decrease in depreciation of data center assets. Interest Expense Three Months Ended September 30, Nine Months Ended September 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Interest expense $ (90)$ (112) 24 %$ (458) $ (340) (26) % Percentage of revenue (2) % (4) % (5) % (4) % Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Interest expense increased by$22 million , or 24%, primarily due to the additional interest expense resulting from the issuance of$1.2 billion of our 2027 Senior Notes inSeptember 2019 . Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Interest expense decreased by$118 million , or 26%, primarily due to the conversion of our 2021 and 2022 convertible notes upon our IPO inMay 2019 , partially offset by the additional interest expense resulting from the issuance of$1.2 billion of our 2027 Senior Notes inSeptember 2019 . Other Income (Expense), Net Three Months Ended September 30, Nine Months Ended September 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Interest income $ 76$ 7 (91) %$ 184 $ 51 (72) % Foreign currency exchange gains (losses), net 8 (47) ** - (104)
**
Gain on business divestitures, net - - ** - 127
**
Unrealized gain (loss) on debt and equity securities, net (13) (7) 46 % 1 (123)
**
Allowance reversal (impairment) of debt and equity securities - 160 ** - (1,690) ** Change in fair value of embedded derivatives - - ** 58 - (100) % Gain on extinguishment of convertible notes and settlement of derivatives - - ** 444 - (100) % Other, net (22) 38 273 % 20 51 155 % Other income (expense), net $ 49$ 151 208 %$ 707 $ (1,688) ** Percentage of revenue 1 % 5 % 7 % (19) % ** Percentage not meaningful. 60
-------------------------------------------------------------------------------- Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Interest income decreased by$69 million , or 91%, primarily due to lower cash balances and market interest rates. Allowance reversal (impairment) of debt and equity securities increased by$160 million primarily due to a reversal of the previously recorded allowance for credit loss on our investment in Grab, initially recognized in the first quarter of 2020. For additional information, refer to Note 3 - Investments and Fair Value Measurement in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q. Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Interest income decreased by$133 million , or 72%, primarily due to lower cash balances and market interest rates. Foreign currency exchange gains (losses), net decreased by$104 million primarily due to unrealized impacts on foreign exchange resulting from remeasurement of our foreign currency monetary assets and liabilities denominated in currencies other than the functional currency of an entity. Gain on business divestitures, net increased by$127 million primarily due to a$154 million gain on the sale of ourUber Eats India operations to Zomato during the first quarter of 2020, partially offset by a$27 million loss on the sale of our JUMP operations to Lime during the second quarter of 2020. Unrealized gain (loss) on debt and equity securities, net decreased by$124 million primarily due to loss from fair value adjustments of our non-marketable securities recorded under the fair value option. Allowance reversal (impairment) of debt and equity securities primarily due to a$1.7 billion impairment of our investment in Didi. For additional information, refer to Note 3 - Investments and Fair Value Measurement in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q. Gain on extinguishment of convertible notes and settlement of derivatives decreased by$444 million , or 100%, due to the conversion of our 2021 and 2022 convertible notes and settlement of the related derivatives in connection with our IPO inMay 2019 . Provision for (Benefit from) Income Taxes Three Months Ended September 30, Nine Months Ended September 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change
Provision for (benefit from) income taxes $ 3$ 23 **$ 20 $ (215) ** Effective tax rate - % (2) % - % 4 % ** Percentage not meaningful. Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Income tax expense increased by$20 million , primarily driven by current tax on foreign earnings offset by a partial benefit fromU.S. losses. Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Income tax expense decreased by$235 million , primarily due to a tax impact from the impairment charges of our investment in Didi. Loss from Equity Method Investments Three Months Ended September 30, Nine Months Ended September 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Loss from equity method investments $ (9)$ (8) 11 % $ (25)$ (27) (8) % Percentage of revenue - % - % - % - % Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Loss from equity method investments decreased by$1 million , or 11%, due to our portion of the net loss from our Yandex.Taxi joint venture. Nine Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Loss from equity method investments increased by$2 million , or 8%, due to our investment in our Yandex.Taxi joint venture. 61 -------------------------------------------------------------------------------- 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 nine months endedSeptember 30, 2020 , we recognized$376 million in total restructuring and related charges in the condensed consolidated statement of operations. Total restructuring and related charges include$256 million of cash settled charges, primarily for severance and other termination benefits, and are expected to be completely paid by the end of 2020. The remaining costs related to these restructuring activities are expected to be immaterial. Restructuring activities during the three and nine months endedSeptember 30, 2019 and three months endedSeptember 30, 2020 were not material. These activities were designed to generate an aggregate cost savings of at least$1.0 billion annually when compared to our original fourth quarter 2020 planned cost structure, with the largest component of savings resulting from reductions in workforce. We do not believe these cost-saving measures will impair our ability to conduct any of our key business functions. There is no guarantee that we will achieve the cost savings that we expect. Refer to Note 18 - Restructuring and Related Charges in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information. Segment Results of Operations We operate our business as four operating and reportable segments: Mobility, Delivery, Freight and, ATG and Other Technology Programs. For additional information about our segments, see Note 12 - Segment Information and Geographic Information in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. Adjusted Net Revenue (1) Three Months Ended September Nine Months Ended September 30, 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Mobility$ 2,868 $ 1,365 (52) %$ 7,586 $ 4,632 (39) % Delivery 392 1,135 190 % 968 2,547 163 % Freight 218 288 32 % 512 698 36 % ATG and Other Technology Programs collaboration revenue (2) 17 25 47 % 17 75 ** All Other 38 - ** 84 35 (58) % Adjusted Net Revenue$ 3,533 $ 2,813 (20) %$ 9,167 $ 7,987 (13) % (1) Adjusted Net Revenue for Mobility and Delivery are non-GAAP measures as defined by theSEC . Adjusted Net Revenue for Freight, ATG and Other Technology Programs and All Other (formerly Other Bets prior to the second quarter of 2020) are equal to GAAP revenue in all periods presented. In 2020, Adjusted Net Revenue does not include certain COVID-19 response initiatives. See the section titled "Reconciliations of Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measure. (2) Consists of$25 million and$75 million collaboration revenue fromToyota recognized in the three and nine months endedSeptember 30, 2020 , respectively. Refer to Note 15 - Non-Controlling Interests in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q for further information on collaboration revenue. ** Percentage not meaningful. Segment Adjusted EBITDA Segment Adjusted EBITDA is defined as revenue less the following expenses: cost of revenue, exclusive of depreciation and amortization, operations and support, sales and marketing, and general and administrative and research and development expenses associated with our segments. Segment adjusted EBITDA also excludes non-cash items, certain transactions that are not indicative of ongoing segment operating performance and / or items that management does not believe are reflective of our ongoing core operations. For additional information, see Note 12 - Segment Information and Geographic Information in the notes to the condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q. 62 -------------------------------------------------------------------------------- Three Months Ended September Nine Months Ended September 30, 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Mobility$ 631 $ 245 (61) %$ 1,329 $ 876 (34) % Delivery (316) (183) 42 % (911) (728) 20 % Freight (81) (73) 10 % (162) (186) (15) % ATG and Other Technology Programs (124) (104) 16 % (369) (303) 18 % All Other (72) - ** (184) (86) 53 % Corporate G&A and Platform R&D (1), (2) (623) (510) 18 % (1,813) (1,647) 9 % Adjusted EBITDA (3)$ (585) $ (625) (7) %$ (2,110) $ (2,074) 2 % (1) Excluding stock-based compensation expense. (2) 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. (3) 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 three months endedSeptember 30, 2020 compared to the same period in 2019, Mobility adjusted net revenue decreased$1.5 billion , or 52%, and Mobility adjusted EBITDA profit decreased$386 million , or 61%. Mobility adjusted net revenue decreased primarily attributable to a decrease in Mobility Gross Bookings due to adverse impacts from the COVID-19 pandemic, partially offset by rationalization in incentive spend. Mobility Take Rate improved to 23.1% from 22.8% compared to the same period in 2019 mainly driven by an overall decrease in incentive spend. Mobility adjusted EBITDA profit decreased primarily attributable to a decrease in Mobility adjusted net revenue, partially offset by a$437 million decrease in insurance expense as a result of a decrease in miles driven, a$275 million decrease in consumer promotions, and a$149 million decrease in credit card processing costs. Additionally, Mobility adjusted EBITDA margin as a percentage of Mobility revenue declined to 17.9% from 21.8%, compared to the same period in 2019, and Mobility adjusted EBITDA margin as a percentage of Mobility adjusted net revenue declined to 17.9% from 22.0% in the same period in 2019. For the nine months endedSeptember 30, 2020 compared to the same period in 2019, Mobility adjusted net revenue decreased$3.0 billion , or 39%, and Mobility adjusted EBITDA profit decreased$453 million , or 34%. Mobility adjusted net revenue decreased primarily attributable to a decrease in Mobility Gross Bookings due to adverse impacts from the COVID-19 pandemic, partially offset by rationalization of incentive spend. Mobility Take Rate improved to 23.4% from 21.0% compared to the same period in 2019 mainly driven by an overall decrease in incentive spend as well as a one-time Driver appreciation award recorded in the second quarter of 2019. Mobility adjusted EBITDA profit decreased primarily attributable to a decrease in Mobility adjusted net revenue, partially offset by a$1.0 billion decrease in insurance expense as a result of a decrease in miles driven, a$715 million decrease in consumer promotions, and a$360 million decrease in credit card processing costs. Additionally, Mobility adjusted EBITDA margin as a percentage of Mobility revenue improved to 18.9% from 17.3%, compared to the same period in 2019, and Mobility adjusted EBITDA margin as a percentage of Mobility adjusted net revenue improved to 18.9% from 17.5% in the same period in 2019. Delivery Segment For the three months endedSeptember 30, 2020 compared to the same period in 2019, Delivery adjusted net revenue increased$743 million , or 190%, and Delivery adjusted EBITDA loss decreased$133 million , or 42%. Delivery adjusted net revenue increased primarily attributable to an increase in Gross Bookings of 135%, 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 across our international markets. Take Rate improved to 13.3% from 10.7% compared to the same period in 2019 driven by a decrease in incentive spend combined with an overall improvement in basket sizes. Additionally, we saw an increase in Delivery adjusted net revenue and Take Rate as a result of certain Delivery People payments and incentives that are recorded in cost of revenue, where we are primarily responsible for delivery services and pay Delivery People for services provided. Delivery adjusted EBITDA loss decreased primarily attributable to an increase in Delivery adjusted net revenue, partially offset by a$279 million increase in cost of revenue as well as a$165 million increase in consumer promotions. 63 -------------------------------------------------------------------------------- For the nine months endedSeptember 30, 2020 compared to the same period in 2019, Delivery adjusted net revenue increased$1.6 billion , or 163%, and Delivery adjusted EBITDA loss decreased$183 million , or 20%. Delivery adjusted net revenue increased primarily attributable to an increase in Gross Bookings of 103%, 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 across our international markets. Delivery Take Rate improved to 12.6% from 9.6% compared to the same period in 2019 driven by a decrease in incentive spend combined with an overall improvement in basket sizes. Additionally, we saw an increase in Delivery adjusted net revenue and Take Rate as a result of certain Delivery People payments and incentives that are recorded in cost of revenue, where we are primarily responsible for delivery services and pay Delivery People for services provided. Delivery adjusted EBITDA loss decreased primarily attributable to an increase in Delivery adjusted net revenue, partially offset by a$628 million increase in cost of revenue combined with an$438 million increase in consumer promotions. Freight Segment For the three months endedSeptember 30, 2020 compared to the same period in 2019, Freight revenue increased$70 million , or 32%, and Freight adjusted EBITDA loss decreased$8 million , or 10%. Freight revenue increased primarily attributable to 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 decreased attributable to an overall improvement in gross profit partially offset by an increase in investment spend in our technology and services as we continue to grow the business. For the nine months endedSeptember 30, 2020 compared to the same period in 2019, Freight revenue increased$186 million , or 36%, and Freight adjusted EBITDA loss increased$24 million , or 15%. Freight revenue increased primarily attributable to 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 increased attributable to an increase in investment spend in our technology and services as we continue to grow the business. ATG and Other Technology Programs Segment For the three months endedSeptember 30, 2020 compared to the same period in 2019, ATG and Other Technology Programs revenue increased$8 million and ATG and Other Technology Programs adjusted EBITDA loss decreased$20 million , or 16%. ATG and Other Technology Programs revenue increased attributable to collaboration revenue related to our three-year joint collaboration agreement withToyota and DENSO entered into inJuly 2019 . ATG and Other Technology Programs adjusted EBITDA loss decreased due to an increase in revenue, as noted above, partially offset by an increase in operational expenses. For the nine months endedSeptember 30, 2020 compared to the same period in 2019, ATG and Other Technology Programs revenue increased$58 million and ATG and Other Technology Programs adjusted EBITDA loss decreased$66 million , or 18%. ATG and Other Technology Programs revenue increased attributable to collaboration revenue related to our three-year joint collaboration agreement withToyota and DENSO entered into inJuly 2019 . ATG and Other Technology Programs adjusted EBITDA loss decreased due to an increase in revenue, as noted above, partially offset by an increase in operational expenses. All Other For the three months endedSeptember 30, 2020 compared to the same period in 2019, All Other revenue decreased$38 million , and All Other adjusted EBITDA loss decreased$72 million . Additionally, for the nine months endedSeptember 30, 2020 compared to the same period in 2019, All Other revenue decreased$49 million , or 58%, and All Other adjusted EBITDA loss decreased$98 million , or 53%. For the three and nine months endedSeptember 30, 2020 , the overall decreases in All Other revenue and All Other Adjusted EBITDA loss is primarily attributable to the JUMP Divestiture in the second quarter of 2020. Certain Key Metrics and Non-GAAP Financial Measures Adjusted Net Revenue, Adjusted EBITDA and Adjusted EBITDA margin as a percentage of Adjusted Net Revenue, as well as revenue and ANR growth rates in constant currency, are non-GAAP financial measures. For more information about how we use 64 -------------------------------------------------------------------------------- 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 meal or grocery 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-20200930_g1.jpg]] Trips. We define Trips as the number of completed consumer Mobility or New Mobility rides and Delivery meal or grocery deliveries 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-20200930_g2.jpg]] 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 meal or grocery deliveries, and amounts paid by Freight shippers, in each case without any adjustment for consumer discounts and refunds, Driver and Merchant earnings, and Driver incentives. 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-20200930_g3.jpg]] 65 --------------------------------------------------------------------------------
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2018 2019 2019 2019 2019 2020 2020 2020 Mobility$ 11,479 $ 11,446 $ 12,188 $ 12,554 $ 13,512 $ 10,874 $ 3,046 $ 5,905 Delivery 2,561 3,071 3,386 3,658 4,374 4,683 6,961 8,550 Freight 126 128 167 223 219 198 212 290 ATG & Other Technology Programs - - - - - - - - All Other 3 4 15 30 26 21 5 -
Adjusted Net Revenue. See the section titled "Reconciliations of Non-GAAP Financial Measures" for our definition and a reconciliation to the most directly comparable GAAP financial measure.
Three Months Ended September Nine Months Ended September 30, 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Adjusted Net Revenue$ 3,533 $ 2,813 (20) %$ 9,167 $ 7,987 (13) % Take Rate is defined as Adjusted Net Revenue as a percentage of Gross Bookings. Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Adjusted Net Revenue decreased$720 million , or 20%, primarily attributable to an overall decrease in Gross Bookings of 8%, on a constant currency basis. Overall Take Rate was 19.1%, down 2.4%, from the same period in 2019. Adjusted EBITDA. See the section titled "Reconciliations of Non-GAAP Financial Measures" for our definition and a reconciliation of net loss attributable toUber Technologies, Inc. to Adjusted EBITDA. Three Months Ended September Nine Months Ended September 30, 30, (In millions, except percentages) 2019 2020 % Change 2019 2020 % Change Adjusted EBITDA$ (585) $ (625) (7) %$ (2,110) $ (2,074) 2 % Three Months EndedSeptember 30, 2020 Compared with the Same Period in 2019 Adjusted EBITDA loss increased$40 million , or 7%, primarily attributable to a$386 million decrease in Mobility Adjusted EBITDA, partially offset by a$161 million improvement in our other business offerings combined with a$113 million reduction in Corporate G&A and Platform R&D costs as well as a$72 million increase mainly related to 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), loss from operations, and other results under GAAP, we use Adjusted Net Revenue, Adjusted EBITDA, and Adjusted EBITDA margin as a percentage of Adjusted Net Revenue as well as revenue and ANR 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 Net Revenue We define Adjusted Net Revenue as revenue (i) less excess Driver incentives, (ii) less Driver referrals and (iii) the addition of our COVID-19 response initiative related payments for financial assistance to Drivers personally impacted by COVID-19 and Driver reimbursements for their cost of purchasing personal protective equipment. We define Mobility Adjusted Net Revenue as Mobility revenue (i) less excess Driver incentives, (ii) less Driver referrals and (iii) the addition of our COVID-19 response initiative related payments for financial assistance to Drivers personally impacted by COVID-19. We define Delivery Adjusted Net Revenue as Delivery revenue (i) less excess Driver incentives, (ii) less Driver referrals and (iii) the addition of our COVID-19 response initiatives primarily related to payments for financial assistance to Drivers personally impacted by COVID-19 and Driver reimbursement for their cost of purchasing personal protective equipment. We believe that these measures are informative of our top line performance because they measure the total net financial activity reflected in the amount earned by us after taking into account all Driver and Merchant earnings, Driver incentives, and Driver referrals in transactions where the Drivers are our customer. The impact of the COVID-19 response initiatives related payments for financial assistance personally impacted by COVID-19 and Driver reimbursement 66 -------------------------------------------------------------------------------- for their cost of purchasing personal protective equipment are recorded as a reduction to revenue. To help our board, management and investors assess the impact of these COVID-19 response initiatives on our results of operations, we are excluding the impact of these COVID-19 response initiatives from ANR. Our board and management find the exclusion of the impact of these COVID-19 response initiatives from Adjusted Net Revenue to be useful because it allows us and our investors to assess the impact of these response initiatives on our results of operations. Excess Driver Incentives Excess Driver incentives refer to cumulative payments, including incentives but excluding Driver referrals, to Drivers that exceed the cumulative revenue that we recognize from Drivers with no future guarantee of additional revenue. Cumulative payments to Drivers could exceed cumulative revenue from Drivers in transactions where the Drivers are our customer, as a result of Driver incentives or when the amount paid to Drivers for a Trip exceeds the fare charged to the consumer. Further, cumulative payments to Drivers for Delivery deliveries historically have exceeded the cumulative delivery fees paid by consumers. Excess Driver incentives are recorded in cost of revenue, exclusive of depreciation and amortization. Driver Referrals Driver referrals are recorded in sales and marketing expenses. Driver incentives and Driver referrals largely depend on our business decisions based on market conditions. We include the impact of these amounts in Adjusted Net Revenue to evaluate how increasing or decreasing incentives would impact our top line performance, and the overall net financial activity between us and our customers, which ultimately impacts our Take Rate, which is calculated as Adjusted Net Revenue as a percentage of Gross Bookings. Management views Driver incentives and Driver referrals as Driver payments in the aggregate, whether they are classified as Driver incentives, excess Driver incentives, or Driver referrals. 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 and Driver reimbursement for their cost of purchasing personal protective equipment. These COVID-19 response initiatives are recorded as a reduction to revenue. Limitations of Non-GAAP Financial Measures and Adjusted Net Revenue Reconciliation Adjusted Net Revenue has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for revenue prepared in accordance with GAAP. The following tables present reconciliations of Adjusted Net Revenue, Mobility Adjusted Net Revenue and Delivery Adjusted Net Revenue to the most directly comparable GAAP financial measures for each of the periods indicated. Freight Adjusted Net Revenue, ATG and Other Technology Programs Adjusted Net Revenue and Other Bets Adjusted Net Revenue (prior to the second quarter of 2020) are equal to GAAP net revenue in all periods presented. Subsequent to the second quarter of 2020, All Other (formerly our Other Bets segment) was no longer deemed an operating or reportable segment. Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2019 2020 2019 2020 Adjusted Net Revenue reconciliation: Revenue$ 3,813 $ 3,129 $ 10,078 $ 8,913 Deduct: Excess Driver incentives (259) (316) (825) (939) Driver referrals (21) (2) (86) (14) Add: COVID-19 response initiatives - 2 - 27 Adjusted Net Revenue$ 3,533 $ 2,813 $ 9,167 $ 7,987 67
--------------------------------------------------------------------------------
Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2019 2020 2019 2020 Mobility Adjusted Net Revenue reconciliation: Mobility revenue$ 2,895 $ 1,365 $ 7,689 $ 4,624 Deduct: Excess Driver incentives (12) (1) (34) (6) Driver referrals (15) (1) (69) (11) Add: COVID-19 response initiatives - 2 - 25 Mobility Adjusted Net Revenue$ 2,868 $ 1,365 $ 7,586 $ 4,632 Three Months Ended September 30, Nine Months Ended September 30, (In millions) 2019 2020 2019 2020 Delivery Adjusted Net Revenue reconciliation: Delivery revenue $ 645$ 1,451 $ 1,776 $ 3,481 Deduct: Excess Driver incentives (247) (315) (791) (933) Driver referrals (6) (1) (17) (3)
Add:
COVID-19 response initiatives - - - 2 Delivery Adjusted Net Revenue $ 392
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 impairments/loss on sale of assets, (xi) acquisition and financing 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 Quarterly Report on Form 10-Q 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 pandemic 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 68 -------------------------------------------------------------------------------- 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 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 certain restructuring and related charges, part of which may be settled in cash; •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, unrealized gain (loss) on debt and equity securities, net, impairment of debt and equity securities, change in fair value of embedded derivatives, gain on extinguishment of convertible notes and settlement of derivatives, and other; and •Adjusted EBITDA excludes certain legal, tax, and regulatory reserve changes and settlements that may reduce cash available to us. 69 --------------------------------------------------------------------------------
The following table presents a reconciliation of net loss attributable to
Three Months Ended September Nine Months Ended September 30, 30, (In millions) 2019 2020 2019 2020 Adjusted EBITDA reconciliation: Net loss attributable toUber Technologies, Inc. $ (1,162) $ (1,089) $ (7,410) $ (5,799) Add (deduct): Net loss attributable to non-controlling interests, net of tax 3 (19) (11) (27) Provision for (benefit from) income taxes 3 23 20 (215) Loss from equity method investments 9 8 25 27 Interest expense 90 112 458 340 Other (income) expense, net (49) (151) (707) 1,688 Depreciation and amortization 102 138 371 395 Stock-based compensation expense 401 183 4,353 591 Legal, tax, and regulatory reserve changes and settlements (27) - 353 57 Driver appreciation award - - 299 - Payroll tax on IPO stock-based compensation - - 86 -Goodwill and asset impairments/loss on sale of assets - 76 8 285 Acquisition, financing and divestitures related expenses - 14 - 43 Accelerated lease costs related to cease-use of ROU assets - 80 - 80 COVID-19 response initiatives - 18 - 90 Gain on lease arrangement, net - (12) - (5) Restructuring and related charges (credits) 45 (6) 45 376 Adjusted EBITDA$ (585) $ (625) $ (2,110) $ (2,074) Adjusted EBITDA Margin as a Percentage of ANR We define Adjusted EBITDA margin as a percentage of ANR as Adjusted EBITDA divided by Adjusted Net Revenue. Segment Adjusted EBITDA margin as a percentage of ANR is segment Adjusted EBITDA divided by segment Adjusted Net Revenue. 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 and ANR 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. 70 --------------------------------------------------------------------------------
Liquidity and Capital Resources
Nine Months Ended September 30, (In millions) 2019 2020 Net cash used in operating activities $ (2,522)$ (1,940) Net cash used in investing activities (79) (2,677) Net cash provided by financing activities 9,022 483 Operating Activities Net cash used in operating activities was$1.9 billion for the nine months endedSeptember 30, 2020 , primarily consisting of$5.8 billion of net loss, adjusted for certain non-cash items, which primarily included$1.7 billion in impairment of debt and equity securities and$591 million of stock-based compensation expense as well as a$736 million decrease in cash consumed by working capital primarily driven by a decrease in our accounts receivable and prepaid expenses and other assets. Net cash used in operating activities was$2.5 billion for the nine months endedSeptember 30, 2019 , primarily consisting of$7.4 billion of net loss, adjusted for certain non-cash items, which primarily included$4.4 billion of stock-based compensation expense,$444 million of gain on extinguishment of convertible notes, depreciation and amortization expense of$371 million ,$80 million in accretion of discount on our long-term debt, as well as a$562 million decrease in cash consumed by working capital primarily driven by an increase in our accrued expenses and insurance reserves, partially offset by higher accounts receivable and prepaid expenses. Investing Activities Net cash used in investing activities was$2.7 billion for the nine months endedSeptember 30, 2020 , primarily consisting of$1.5 billion in acquisition of business, net of cash acquired,$1.5 billion in purchases of marketable securities and$493 million in purchases of property and equipment, partially offset by proceeds from maturities and sales of marketable securities of$801 million . Net cash used in investing activities was$79 million for the nine months endedSeptember 30, 2019 , primarily consisting of$406 million in purchases of property and equipment, partially offset by$293 million in proceeds from business disposal, net of cash divested. Financing Activities Net cash provided by financing activities was$483 million for the nine months endedSeptember 30, 2020 , primarily consisting of$1.5 billion of issuance of senior notes, net of issuance costs, partially offset by$891 million of principal repayment on Careem Notes. Net cash provided by financing activities was$9.0 billion for the nine months endedSeptember 30, 2019 , primarily consisting of$8.0 billion of net proceeds received from issuance of common stock upon our IPO, net of offering costs,$500 million of proceeds received from issuance of common stock related to a private placement, partially offset by$1.5 billion of taxes paid related to net share settlement of equity awards,$1.2 billion of proceeds from issuance of senior notes, net of issuance costs and$120 million of principal payments on financing leases. Other Information As ofSeptember 30, 2020 ,$1.5 billion of our$6.2 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. However, 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 ofSeptember 30, 2020 , 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, 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. Off-Balance Sheet Arrangements As ofSeptember 30, 2020 , we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenue, or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors. 71
--------------------------------------------------------------------------------
Critical Accounting Policies and Estimates Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the amounts reported amounts of assets, liabilities, revenue and expenses, and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there are material differences between these estimates and our actual results, our future financial statements will be affected. For additional information about our critical accounting policies and estimates, see the disclosure included in our Annual Report on Form 10-K as well as Note 1 - Description of Business and Summary of Significant Accounting Policies in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q. Contractual Obligations As ofJanuary 2, 2020 , we committed to issue convertible notes in connection with the acquisition of Careem which remains in effect as ofSeptember 30, 2020 . Refer to Note 8 - Supplemental Financial Statement Information in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q. Additionally, inJuly 2020 , we entered into a commercial technology agreement with Google LLC for a term of four years. We are committed to spend an aggregate of at least$160 million for the period fromJuly 2020 throughJune 2024 . Refer to Note 13 - Commitments and Contingencies in the notes to the condensed consolidated financial statements included in Part I, Item 1, of this Quarterly Report on Form 10-Q. As ofSeptember 30, 2020 , there have been no other material changes outside the ordinary course of business to the contractual obligations, as disclosed in our Annual Report on Form 10-K for the year endedDecember 31, 2019 . Recent Accounting Pronouncements See Note 1 - Description of Business and Summary of Significant Accounting Policies, in the notes to the condensed consolidated financial statements included elsewhere in Part I, Item 1 of this Quarterly Report on Form 10-Q.
© Edgar Online, source