Uber Technologies Inc is the maker of transportation app Uber, which enables customers to book drivers using their own cars. It was founded by Travis Kalanick and Garrett Camp in 2009 with the app released in June 2010. At the end of 2011, Uber had raised a total $44.5m for international expansion. In 2014, the company raised another $1.2bn pushing its valuation to $18.2bn. China’s Baidu was reported to invest $600m in December 2014, though precise financial figures of the deal were not disclosed. As of September 2015, the app is available in 60 countries and 300 cities worldwide and has been estimated to be worth $50bn.
Uber international expansion by city
Since its launch the app has sparked protests in cities such as Paris, Berlin and London from cab drivers threatened by its low prices. The app has since been banned in Berlin by the government. This year, the company has been busy launching the Uber Advanced Technology Center in collaboration with Carnegie Mellon, as well as car sharing service UberPOOL in LA and NYC, as well as food delivery services UberFRESH and UberEATS.
Key Uber Data Points
- Uber app is available in 60 countries and over 300 cities worldwide (Source: Uber)
- It fulfills one million rides daily and has over eight million users (Source: Uber)
- In 2011, Uber raised $44.5m, followed by $1.2bn in 2014 and another investment from Baidu at the end of 2014 (Source: Vator, Higbeam, Techcrunch)
- In the US, Uber has over 160,000 active drivers, receiving $656.8m of payments during Q4 2014 (Source: Benenson Strategy Group)
- 14% of its drivers are female (Source: Uber)
- The top two reasons for drivers to choose Uber are higher income (91%) and work-day flexibility (87%) (Source: Bureau of Labor Statistics)
- It’s largest competitor Lyft generates a fraction of revenue ($2.2bn) compared to Uber ($26.4m) (Source: Fortune)
- However, Uber has given Lyft a boost – generating greater engagement on the app (Source: Forbes)
- Uber is expected to process $10.84bn in bookings in 2015 (Source: Reuters)
According to Uber, the company is fulfilling over one million rides on a daily basis and currently has over eight million users. The company’s fast rise to success directly correlates with the decrease in traditional taxi usage.
More people are using Uber than taxis now
Given the fast rise of smartphone adoption globally, Uber’s success doesn’t come as a surprise. But there are many reasons why customers prefer to book Uber versus taxis. Among those are: clear overview of pricing prior to booking, one-tap rides, follow drivers on map, cashless convenience, fare splitting as well as feedback options.
Taxi versus Uber services
Findings by Benenson Strategy Group show that Uber had over 160,000 active drivers by the end of 2014 in the US, receiving total payments of $656.8m during Q4 2014 from the company.
Active Uber drivers
Interestingly, the study found that 14% of drivers were female, exceeding the percentage of women taxi and chauffeur drivers. 71% of Uber drivers have family at home and prefer the flexibility that Uber allows them.
Large number of Uber drivers in the US are female
Due to its low barriers to entry and flexible options, many drivers test Uber. However, continuation rates drop off steadily over time.
Uber driver continuation rates half over 12 months
A survey by the Bureau of Labor Statistics adds that the reason why many drivers choose Uber is that 87% of them wish to be their own boss. 85% want to have a better life-work balance. Interestingly, 51% of Uber drivers only work 15 hours or less per week. However, the top reason for driving with Uber is still a demand to earn a higher income for 91%.
Why are people choosing to drive with Uber?
Among Uber’s largest competitors is American company Lyft. However, given Uber’s head start, it outscores Lyft significantly when spending on both apps was compared. At a total of $28.6m spent on both services, Uber takes the majority share of $26.4m and Lyft $2.2m. Uber has up to six times more new rides per month and a total of 1.23m rides. However, Lyft rides are an average $8 cheaper than Uber.
Uber vs Lyft
When comparing users of Uber and Lyft it becomes evident that customers of the two platforms aren’t all that different. Whilst more women (58%) than men (42%) use Lyft, Uber user genders are fairly close in terms of percentage. Both on Lyft as well as Uber, the age group taking the most rides are the 25-34 year-olds.
Uber vs Lyft user profiles
However, the latest data research from Wefi Intelligence, which tracks mobile user analytics anonymously, shows that Uber’s success may have inadvertendly given Lyft a boost. Over the first four months in 2015, the percentage of Uber users who installed Lyft (green line) has grown, rising from 6% to 10%.
Uber boosts Lyft
Perhaps even more interesting, the competitor is generating higher engagement than Uber. Wefi shows that people with Lyft installed were more likely to open that app than Uber users.
Lyft sparks greater engagement
Despite higher rates however, Uber is generating 12x more revenue than Lyft, according to FutureAdvisor.
Uber increases revenue 10-11 times faster than Lyft
According to recently leaked documentation to Reuters, Uber is expected to process $10.84bn in bookings in 2015. The company takes a 20% cut on rides bringing its revenue to a total of $2bn. Projections for 2016 are to triple to $26.12bn payments with $5bn in revenue.
Whilst predictions for growth are strong, the company is burning through cash fast. According to shareholder documents released earlier this year, Uber had operation losses of $470m on $415m revenue. However, the company said the figures were old.
Adding fuel to the fire, there has been much controversy surrounding the company recently, particularly in relation to safety concerns including fake Uber drivers, a driver threatening a customer for canceling a ride as well as allegations that the company may have been operating illegally in Jakarta.
It remains to be seen if Uber can generate revenues high enough to satisfy its investors and achieve predicted scalability as new competitors such as Gett flood to market.