FY21 was a nightmare for mobility startups and ride-hailing behemoths such as Uber and Ola as their operations were disrupted due to the pandemic. While Ola is yet to file FY21’s (or even FY20) financial results, Uber India faced a 47.3% depletion in its operating income during the financial year ending March 2021.
Uber India operating revenue has shrunk to Rs 370.5 crore during FY21 from Rs 703.1 crore in FY20. During the last fiscal, around 81% or Rs 300 crore of these revenues were generated from Uber’s ride-hailing business while the remaining Rs 70.5 crore were collected from Uber Inc. for the provision of business support services to group companies.
The business support segment made up a larger part of Uber’s revenue during FY20 when it collected Rs 560.33 crore from its Amsterdam based parent in lieu of support services provided during that fiscal.
Ride-hailing lost Rs 603 Cr for Uber India in FY21
Importantly, Uber India lost Rs 602.7 crore on the ride-hailing segment while the support services reaped profits of Rs 5.54 crore during FY21. It’s worth noting that the company doesn’t operate a food delivery business in India as it had sold UberEats to Zomato in January 2020.
Marketing cost shrank with diminishing scale
We observed the cost reduction measure put in place by the management during the last fiscal due to the contracted demand. The company cut back its advertising and promotional costs by 47.3% to Rs 121.1 crore in FY21 from Rs 229.6 crore spent during FY20.
The austerity measures are also evident in the cost of incentives and discounts incurred by the company which dropped by nearly 80% to Rs 91.5 crore in FY21 as compared to Rs 454.7 crore spent on discounts to users and incentives given to drivers on its platform.
Expense on salaries and its driver ecosystem cost Rs 668 Cr
Employee benefits costs incurred by the company were also reduced by 15.8% to Rs 270 crore as it scaled back operations and the UberEats business was sold to Zomato. Uber India had laid off over 500 staff in May 2020 and it looks like the downsizing of the workforce resulted in this dip.
The sale to Zomato had included a 9.99% stake in the latter for Uber, which could be a silver lining for the year, after Zomato’s IPO and high ruling price currently, putting the value of the stake at almost $1.3 billion, or Rs 10,000 crores.
Uber India has recognised Rs 398.7 crore as “cost of materials consumed” in its income statement, which likely represent the payments to fleet operators, drivers and other external contractors for its ride-hailing business.
Unlike revenue, expenses contracted by ‘just’ 26%
Due to company-wide cost reduction measures implemented by the management, Uber India’s net cash outflow from operations dropped by 36.3% to Rs 794.4 crore during FY21 as compared to outflows of Rs 1,248 crore in FY20.
As a result, total annual expenses contracted by 25.8% to Rs 985 crore in FY21 from Rs 1326.7 crore spent in total during FY20. On a unit level, Uber India spent Rs 2.65 to earn a single rupee of revenue during FY21.
While the company had posted a profit of Rs 720.7 crore during FY20 on account of the sale of UberEats to Zomato, its annual losses stood at Rs 334 crore during FY21. The ride-hailing giant continues to bleed cash on its rides business in India as evident by the segment results.
While the shrinking of Uber India’s revenue and even losses is no surprise considering the disruptions during the year, the wide gap between revenues and expenses will worry the firm in a market it considers a key one.
In the US and other key markets, the company is yet to turn the corner into profits for its ride-hailing business and the Indian market offers no respite. In the US, its food delivery business has become larger than its core ride-hailing business. On a consolidated basis, Uber is expecting to post a profit (estimated $25 million) for the first time in the current quarter.
While that may or may not happen this quarter, it would seem that Uber’s Indian entity would need at least two-three fiscals more to come close to breaking even.
A sticky issue that could really help would be the resolution of its tax problems in India. The company has several tax cases pending disposal. Uber has recognised these probable tax payments as contingent liabilities in its balance sheet, including Rs 371.6 crore regarding income tax matters and Rs 879.1 crore of GST payables.