5-1 Presentation - Insights from Uber

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1 Presentation: Insights from Uber 5-1 Presentation: Insights from Uber Jacob M Bailey MBA-500-R4357 Building Business Leaders June 13, 2021 Professor Keith Rieger

2 Presentation: Insights from Uber 1. Identify the financial key performance indicators of Uber’s success. Cost of customer loyalty — partnership programs with capital one and Starwood Hotels earn riders discounted rides and hotel points. Spotify allows riders to listen to their music on the ride. Uber VIP program for individuals who have taken over 100 Uber rides. Innovation — mobile payments, mobile hailing, seamless payments, better cars, and driver ratings and rider ratings. Ride requests through Facebook Messenger, breathalyzer kiosks in major cities for bar patrons who have had a little too much to drink will order an Uber, and the Uber mobile game. Uber is investing in AI software and testing self-driving cars in select big cities. Net revenue of other markets — UberEATS food delivery service. UberRUSH business to business delivery program. UberHEALTH to delivery medical services like flu shots. UberEVENTS for mass transport for special events for hosts to prearrange transport for their guests. Current Ratio — Uber did very well increasing their current ratio from 2018-19, however, with the global pandemic forcing many would-be customers to remain home, they took quite a hit. In 2019, Uber’s current ratio was 2.46, by year’s end of 2020, the company’s ratio was at a 1.43. 2. Analyze how different functional areas, departments, or both of Uber contribute to its overall financial success. Uber manages a mobile platform that offers a variety of services that contribute to its overall financial success. The mobile platform itself allows riders and drivers to connect and provides the customer with an array of travel options. Whether the customer is looking for a ride-share, general travel, or a more luxurious travel method, Uber has an option built in, making their

3 Presentation: Insights from Uber platform more competitive on the market. The mobile app helps not only the rider and driver locate each other, but also helps the company track usage of their app across the globe. This tracking allows Uber to monitor prices and adjust for any high demand, increasing profits. Given that Uber only manages the platform they provide, they save costs in having to manage an entire fleet of vehicles. Uber isn’t just a taxi service; they have branched into other markets including food delivery and freight delivery. This innovation and providing of an array of services provides more incentive for the users of their platform, whether they are a customer, driver, or business looking for other options. • What common industry financial benchmarks should Uber consider in developing its strategies to grow the business? Current ratio - being the most important ratio to monitor, it makes sense that Uber should focus on maintaining liquidity and having the ability to pay off its debts. Debt to equity ratio — to measure whether the company is utilizing its incurred debts responsibly or if they are taking on too much debt. Return on equity ratio — Uber can determine the profit its generating using money invested. Net profit margin — can be utilized to determine if the ideas they have can result in an efficient process and system that will produce a profit. • Which financial benchmark can Uber adopt to measure its performance and increase its industry attractiveness? Use Porter’s five forces to support your answer. 1. Industry competition — Existing businesses such as Lyft, public transit, and taxi services. Food delivery services such as Doordash, Grubhub and Postmates. Uber has a standing lead in the US market, and it is unlikely that any singular business can overtake them.

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4 Presentation: Insights from Uber However, with multiple companies competing for business, Uber is threatened with loss of revenue if they are unable to maintain their customers. 2. New entrants — Other ride-sharing apps and food delivery services. 3. Substitute products or services — urban micro-mobility platforms, vehicle sharing, long distance transport such as RV and buses, and soon to come services such as autonomous vehicles. Another consideration is that many people are working from home now and this eliminates the need for transportation to and from the office. 4. Bargaining power of suppliers — For the most part, the drivers who are considered the lower-level employees of the company are the suppliers of the business, they provide the means of transportation to the customer. Their bargaining power is rather low since there is no union for ride-sharing employees. Only recently has the service provided an option for tipping drivers to the platform. The most crucial bargaining chip that drivers have is the ability to switch to another platform such as Lyft and other ride-sharing apps. 5. Bargaining power of customers — Customers have the ability to price shop for other ride- share companies, the availability of drivers and wait times associated play a huge factor in a customer’s decision to use Uber or another ride-sharing company or substitute product altogether. - Are there any critical elements of accounting guidelines that will be crucial for Uber to meet? Explain your reasoning. If Uber’s ultimate goal is to transition to self-driving cars as they have invested so heavily into the technology and started testing in select cities, then they will want to start to analyze how they can include the costs of these cars into their financials. With the growing concern of competition in the business and the aftermath of a global pandemic, Uber hasn’t relied on any inventory,

5 Presentation: Insights from Uber since their platform is their product. The inventory, or cars, are supplied by their drivers who utilize their platform to provide delivery services. If Uber is to invest in AI powered self-driving cars, they would be investing in a physical vehicular inventory and would need to include that into their financials.

6 Presentation: Insights from Uber References CSR information for Uber . CSRHub. (n.d.). https://www.csrhub.com/CSR_and_sustainability_information/Uber. Miller, G. (n.d.). Uber's Marketing Strategy in 7 Steps, Revisited . Annex Cloud. https://www.annexcloud.com/blog/ubers-marketing-strategy-in-7-steps-revisited/. Schermerhorn. J. R., & Bachrach D. G. (2020). Management . [VitalSource Bookshelf]. Retrieved from https://online.vitalsource.com/#/books/9781119497721/ Uber 2020 Annual Report . Uber Investor. (2021, February 26). https://s23.q4cdn.com/407969754/files/doc_financials/2021/ar/FINAL-Typeset-Annual- Report.pdf. Uber Technologies Financial Ratios for Analysis 2016-2021: UBER . Macrotrends. (n.d.). https://www.macrotrends.net/stocks/charts/UBER/uber-technologies/financial-ratios. Uenlue, M. (2018, March 18). Strategy: Porter's Five Forces (with in-depth example Uber) . Innovation Tactics. https://innovationtactics.com/porter-five-forces/.

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5-1 Presentation - Insights from Uber

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