top of page

Uber India's Fiscal Ride: Revenue Surges but Challenges Loom with Soaring Losses

In the fiscal year ending March 2023, Uber India, the online mobility platform, experienced a notable 54.46% increase in revenue, surpassing Rs 2,600 crore. However, the company also witnessed a 57% rise in losses during the same period. Uber India's organizational structure underwent significant changes in FY23, with Uber India Systems Private Limited (UISPL) merging with UIRDPL (Uber India Research and Development) and XLI (Xchange Leasing India). This consolidation seems to have positively impacted the company's revenue, which reached Rs 2,666 crore in FY23.


Examining revenue sources, 25% of the total operating revenue came from collections generated from Uber rides (ride-hailing), marking a 75% increase to Rs 679 crore in FY23. The remaining income was derived from business support services provided to the parent company, Uber B.V., based in San Francisco, amounting to Rs 1,977 crore and growing by 52.5% in FY23. In response to the structural changes, Uber India stated, "…The three entities have been merged to streamline internal structures for it to result in better efficiency and synergy," without providing specific details about the nature of services offered to Uber B.V. The company also reported non-operating income of Rs 78 crore from brand license and non-compete fees in the fiscal year under review. On the cost side, employee benefits expenditure surged by 56.4% to Rs 2,079 crore in FY23, including a substantial Rs 668 crore as Employee Stock Ownership Plan (ESOP) cost. Consumables costs increased by 27% in the same period. Various expenditures, including contractual manpower, legal professional services, marketing, repair, maintenance, and other overheads, contributed to the overall expenditure, which rose to Rs 3,146 crore in FY23 from Rs 2,146 crore in FY22, reflecting a 46.6% increase. Consequently, the losses of Uber India Systems widened by 57.87% to Rs 311 crore in FY23 from Rs 197 crore in FY22. The Return on Capital Employed (ROCE) and EBITDA margin stood at -17% and -10%, respectively, while on a unit level, the company spent Rs 1.18 to earn a rupee in FY23.



Despite the parent company achieving profitability in Q2 of 2023, Uber India continues to face substantial losses. Over the past decade, the company has undergone multiple business cycles, marked by rising revenues, losses, consolidation, and repeats. Persistent losses suggest inherent challenges with the business model, exacerbated by driver dissatisfaction with the company's fee structure. From its initial promising days, Uber India has underperformed, with minimal transformative changes in recent years, except for the decision to expand revenue by leasing vehicles and merging the leasing firm. The company's struggle to fulfill promises of reliable and economical rides and generate decent earnings for partners has been evident. With the increasing pressure to shift to electric vehicles in key markets like Delhi, Uber faces ongoing challenges in maintaining fleet strength and controlling costs. The broader ride-hailing market remains a challenge at scale, with competitors like Ola facing losses and customer apathy. Even newcomers like BluSmart have grappled with reducing losses as they expand.

Comments


bottom of page