Uber (NASDAQ:UBER) has been posting sizable losses, burning through over $10 billion in cash since it was founded. However, the company’s relatively fast-growing revenue base and better cost absorption could eventually allow it to break even and become cash flow neutral. In this analysis, we take a look at how the company’s key revenue and cost drivers are expected to trend, and when the company could potentially reach break even. Note that we use adjusted EBITDA as a proxy for cash flows, given Uber’s relatively asset-light model.

View our interactive dashboard analysis How Uber Could Post Positive Cash Flows

1. Estimating Uber’s Revenues

We expect Uber’s Total Revenues Could Grow To ~$23 Billion By 2022

Details about our forecast for Uber’s revenues by operating segment is available in our interactive dashboard for the company.

2. A Look At Uber’s Key Cost Drivers

#2.1 Cost of Revenues Could Rise From $5.6 Billion In 2018 To $10 Billion By 2022

Cost of revenues includes core platform insurance expenses, credit card processing fees, data center expenses, mobile device and service expenses.
While we expect the cost of revenues to rise in dollar terms, it should decline as % of total revenues.
#2.2 R&D Expenses Could Rise From $1.5 Billion in 2018 to $2.6 Billion In 2022.

Expressed in terms of revenues, we expect R&D to decline from 13.4% in 2018 to about 11% in 2022.
#2.3 We Expect Sales & Marketing Expenses To Rise From $3.2 Billion In 2018 To Over $5 Billion by 2022.

Expressed in terms of revenues, we expect sales and marketing expenses to fall from 28% in 2018 to 24% in 2022.
#2.4 General & Administrative Expenses Could Grow From $2.1 Billion In 2018 to $2.9 Billion In 2022.

We expect G&A expenses as % revenue to decline from 18.5% in 2018 to about 13% in 2022.
In dollar terms, we expect the metric to grow from $2.1 billion in 2018 to $2.9 billion in 2022
3. Adjusted EBITDA Could Break-Even By 2022

The company could approach break-even by 2022, assuming that total revenues come in at $22.8 billion, with Total Operating Expenses, excluding D&A standing at $23.3 billion, and Other Adjustments (stock-based compensation, one-time items such as impairments and legal costs) coming at $600 million.
While Uber’s business model remains unproven, with the company facing increasing competition in courting customers and retaining drivers, it could achieve this if it can maintain revenue growth while controlling costs.

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