Hello and welcome back to our regular morning look at private companies, public markets and the grey space in between.
Today we’re looking into Uber’s bike bet and what the push could mean for Lime and other micromobility companies working to find a sustainable business model. As profitability comes back into vogue among investors at the expense of growth, both Uber and a cadre of mobility-focused startups are hoping that electric- and pedal-powered transport pay off.
Let’s take a look.
Uber’s bike push
Uber is most famous for its ride-hailing business, and the on-demand car-hire service that Uber was founded upon still generates the bulk of its revenue. In its most recent quarter, for example, Uber’s ride-hailing segment generated $2.86 billion in adjusted net revenue. The next-largest Uber business, its Uber Eats segment, generated a comparatively modest $392 million in adjusted net revenue.
Which brings us to the smaller Uber efforts. Freight, its aptly-named hauling business, brought in $218 million in adjusted net revenue in the same quarter (Q3 2019). And finally, Uber’s “Other Bets” segment was responsible for $38 million in adjusted net revenue. That was the smallest result, but also the fastest-growing, exploding from $3 million in adjusted net revenue in the year-ago quarter.
While Q3 2019 was better for Uber than its preceding periods regarding growth, the company’s slowing expansion and stiff losses (its net loss in the period came to $1.16 billion), have left the global transportation giant hunting for new revenue. And its Other Bets segment, which includes incomes from “dockless e-bikes and e-scooters,” is growing like heck.
This recent news item was therefore not surprising:
“We want to double down on micromobility,” Christian Freese, Jump’s head of EMEA, told CNBC in an interview. “We have seen how beautifully it works with our core business and ride sharing, and want to invest more and deeper, especially in Europe.”
Uber claims adoption of Jump’s bikes and scooters in Europe has outpaced that of the U.S. in the last eight months. It says more than 500,000 Europeans rode the vehicles in the last eight months alone, racking up 5 million trips in total.
The move by Uber makes good sense. The firm needs to grow, it has found a vein of consumer interest to mine, and it has the scale (financial, and in terms of an existing userbase) to pull off the scheme.
Of course, even if Uber quadrupled its Other Bets income (which includes more than just micromobility dollars), the segment would only add up to around 4% of its Rides adjusted net revenue (using the company’s Q3 figure for reference.) Growth, however, is growth, and investors love a story.
Uber is not the only company that wants to make bikes and scooters work at scale. There are a number of startups around the world that have raised rafts of capital to do just that. And they don’t want Uber to win.
Lime’s new thing
Uber’s bike news broke yesterday. Today, Lime was in the news touting a new way of renting its popular e-scooters.
Here’s TechCrunch’s Megan Rose Dickey on the Lime announcement:
Following in the footsteps of Lyft and its partner Uber, Lime is launching a subscription plan for its shared electric scooters. Called LimePass, riders who subscribe get access to unlimited free scooter unlocks, instead of paying $1/€1 per unlock, for a week at a time.
As Rose Dickey notes, Lime is not alone in pursuing the model. Uber has a $24.99 per month program that “combines rides, Eats, bikes and scooters,” for example. More recently, Lyft put together Lyft Pink. The service, which costs $19.99 per month, “gets you 15% off on all car rides, three free bike or scooter rides per month” along with ride-hailing goodies.
Even closer to home, Lime is competing with Bird, another U.S.-based e-scooter company, which also has a subscription program that costs $24.99 per month. The Verge panned it, notably, decrying the hardware provided.
What matters for us is that Uber’s hoped-for revenue push will bump into what Lime is up to. After all, Lime has a history of renting scooters and bikes, the same machines that Uber wants to push. And Lime operates globally, as does Uber.
It’s easy, then, to expect friction between the two scooter players. And, if we might be so bold, a deal. After all, Lime needs to find an exit for its unprofitable revenue. Uber needs growth and can probably afford what Lime currently loses (despite a need to lower it overall losses, we should say; Lime’s deficits are likely ingestible by Uber as it tightens the rest of its operations), and the two companies are going to wind up competing quite often at their respective points of growth. Why have the fight when you could have a deal?
Lime last raised $310 million in February of 2019. That money won’t last forever (the company tends to leave less than 12 months between its funding rounds, regardless of its size). How deep will the line of investors be to lead its next nine-figure check when Lime’s up against a newly-aggressive Uber globally and Bird, which has raised lots of capital as well, at home? Everyone can’t win at bikes and scooters at the same time.
Regardless of our acquisition fever dreams, keep an eye on Uber’s Other Bets line item when it reports its Q4 2019 results. The pace of growth of that figure should help us understand how large the micromobility market really. And how much of it Uber is taking for itself.
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