Based on my observation of Uber and similar businesses, they are likely losing money slower during this downturn, and this layoff will help preserve more needed cash.
Less rides means less revenue but also less cloud compute cost to serve them, payout to drivers, and certainly no driver subsidies at this point, which during normal times is quite costly. Many of these are variable costs tied to ride volume.
The only major fix costs to operating Uber's ridesharing business is people, office commercial leases, and maintaining IT infrastructure (I believe Uber operates its own cloud, but not 100% sure).
And now it's cutting the "people" part to preserve more cash for the long-haul.
According to their last earnings call, Uber's rides business was making enough profit paying for all of R&D costs. It's been a long time since the "losing money on every ride" narrative was true.
Weren't the massive quantity of discounts required to entice people to use them factored into marketing? Further I believe they counted the entire price of a shared ride as "revenue" while they only counted 30% of regular rides, even though shared rides likely made them even less money? That would restore the narrative.
Their annual report[1] shows 2019 revenue of $14.1bn, with cost of revenue of $7.2bn and sales and marketing costs of $4.6bn.
Both cost of revenue and sales and marketing (for simplicity's sake I'll call these "direct costs") grew proportionately to revenue growth year on year from 2018 to 2019, running at 77% of revenue in 2018 and 83% of revenue in 2019. The 5% swing there is almost purely marketing: cost of revenue was 49.8% of revenue in 2018 and 50.9% in 2019, whereas marketing grew from 27.9% to 32.6%. So they could be hiding subsidies (prefer this term to discounts) in marketing costs, although it's not such a significant figure that it loses them money.
It's conceivable that they're still doing some hocus pocus with the treatment of pool revenue, but it would have to be a significant portion of their revenue for it to have an impact. I can't find the disclosures on this if they're in there (although they do disclose that they treat three people pooling as three rides, which seems fair enough).
The business suffered a 2.8x increase in losses from operations -- $8.5bn up from $3bn -- but this appears to mainly be attributable to R&D costs growing from $1.5bn to $4.8bn YOY.
How much of the expense is directly for a ride versus other support activities? I imagine everything from 1099 and taxes to dev qa staging runs on aws?
Shopify is majority GCP, minority AWS for its cloud infrastructure [0]. Curious how they are splitting workloads between these two clouds during this extended usage spike.
Good to hear. Curious why Fauna is being looked into by your team, since it appears to be a much newer database (and also not open sourced AFAIK)?
Mongo makes sense given its obvious popularity.
Interested in getting more informed on the performance penalties of a proper E2E implementation for videoconferencing use cases.
If Zoom implements proper E2E like Facetime, would it be more laggy, less able to handle meetings of more than 50 people, etc.? Will the general user experience degrade noticeably?
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