Uber Technologies, Inc 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the consolidated financial statements and related notes included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K . In addition to our historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. You should review the sections titled “Special Note Regarding Forward-Looking Statements” for a discussion of forward-looking statements and in Part I, Item 1A, “Risk Factors”, for a discussion of factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis and elsewhere in this Annual Report on Form 10-K. Overview We are a technology platform that uses a massive network, leading technology, operational excellence and product expertise to power movement from point A to point B. We develop and operate proprietary technology applications supporting a variety of offerings on our platform. We connect consumers with providers of ride services, merchants and food delivery services as well as public transportation networks. We use this same network, technology, operational excellence and product expertise to connect shippers with carriers in the freight industry. We are also developing technologies that provide new solutions to solve everyday problems. COVID-19 In March 2020, the World Health Organization declared the outbreak of the coronavirus disease (“COVID-19”) a pandemic. The COVID-19 pandemic has rapidly changed market and economic conditions globally, impacting Drivers, Delivery People, Merchants, consumers and business partners, as well as our business, results of operations, financial position and cash flows. Various governmental restrictions, including the declaration of a federal National Emergency, multiple cities’ and states’ declarations of states of emergency, school and business closings, quarantines, “shelter at home” orders, restrictions on travel, limitations on social or public gatherings, and other social distancing measures have had, and may continue to have, an adverse impact on our business and operations, including, for example, by reducing the global demand for Mobility rides. The significant adverse changes in the economic and market conditions resulting from COVID-19 triggered the recognition of pre-tax impairment charges of $1.7 billion in the first quarter of 2020, principally relating to our investment in Didi. For additional information on impairment charges, refer to Note 3 - Investments and Fair Value Measurement and Note 7 – Goodwill and Intangible Assets in the notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. COVID-19 Response Initiatives We continue to prioritize the health and safety of our consumers, Drivers and Merchants and the communities we serve. As one of the world’s largest platforms for work, we continue to believe that we will play an important role in the economic recovery of cities around the globe. We are focused on navigating the challenges presented by COVID-19 through preserving our liquidity and managing our cash flow by taking preemptive action to enhance our ability to meet our short-term liquidity needs. The pandemic has reduced the demand for our Mobility offering globally. We have responded to the COVID-19 pandemic by launching new, or expanding existing, services or features on an expedited basis, particularly those related to delivery of food and other goods. To comply with social distancing guidelines of national, state and local governments, we have temporarily suspended UberPOOL, our shared Mobility offering, globally and implemented “leave at door” delivery options for Delivery offerings. Additionally, we have asked that all employees who are able to do so work remotely. In addition, to support those whose earning opportunities have been depressed as a result of the COVID-19 pandemic, as well as communities hit hard during this unprecedented period, we announced and implemented several initiatives during the first quarter of 2020, including a financial assistance program, for Drivers who are impacted by the pandemic, as well as personal protective equipment disbursement. While we continue to assess the impact from the COVID-19 outbreak, we are unable to accurately predict the full impact of COVID-19 on our business, results of operations, financial position and cash flows due to numerous uncertainties, including the severity of the disease, the duration of the outbreak, any future waves or resurgences of the virus, variants of the virus, the timing of widespread adoption of vaccines against the virus, additional actions that may be taken by governmental authorities, the further impact on the business of Drivers, Merchants, consumers, and business partners, and other factors identified in Part I, Item 1A. “Risk Factors” of this Annual Report on Form 10-K. Driver Classification Developments The classification of Drivers is currently being challenged in courts, by legislators and by government agencies in the United States and abroad. We are involved in numerous legal proceedings globally, including putative class and collective class action lawsuits, demands for arbitration, charges and claims before administrative agencies, and investigations or audits by labor, social 52 security, and tax authorities that claim that Drivers should be treated as our employees (or as workers or quasi-employees where those statuses exist), rather than as independent contractors. Of particular note are proceedings in California, where on May 5, 2020, the California Attorney General, in conjunction with the city attorneys for San Francisco, Los Angeles and San Diego, filed a complaint in San Francisco Superior Court (the “Court”) against Uber and Lyft, alleging that drivers are misclassified, and sought an injunction and monetary damages related to the alleged competitive advantage caused by the alleged misclassification of drivers. On August 10, 2020, the Court issued a preliminary injunction order prohibiting us from classifying Drivers as independent contractors and from violating various wage and hour laws. Following a stay of the injunction and our unsuccessful appeal of the injunction to a Court of Appeal, we were ordered to comply with the preliminary injunction. In November 2020, California voters approved Proposition 22, a state ballot initiative that provides a framework for drivers that use platforms like ours for independent work. Proposition 22 went into effect in December 2020 and we expect that Drivers will be able to maintain their status as independent contractors under California law and that we and our competitors will be required to comply with the provisions of Proposition 22. Although we do not expect that the California Attorney General’s preliminary injunction will go into effect, litigation asserting that Assembly Bill 5 requires Drivers in California to be classified as employees, including the California Attorney General’s suit, remains pending, and we may face liability relating to periods before the effective date of Proposition 22. To comply with Proposition 22, we have incurred and expect to incur additional expenses, including expenses associated with a guaranteed minimum earnings floor for Drivers, insurance for injury protection and subsidies for health care. We do not expect these changes will have a material impact on our business, results of operations, financial position, or cash flows. Also of note, on October 28, 2015, a claim by 25 Drivers, including Mr. Y. Aslam and Mr. J. Farrar, was brought in the UK Employment Tribunal against us asserting that they should be classified as “workers” (a separate category between independent contractors and employees) in the UK rather than independent contractors. The tribunal ruled on October 28, 2016 that the Drivers were workers whenever our app was switched on and they were ready and able to take trips, based on an assessment of the app in July 2016. The Court of Appeal rejected our appeal in a majority decision on December 19, 2018. We appealed to the Supreme Court and a hearing at the Supreme Court took place in July 2020. On February 19, 2021, the Supreme Court of the UK upheld the tribunal ruling. Damages may include back pay including holiday pay and minimum wage. Additional claimants have also filed and each claimant will be required to bring their own separate action to an employment tribunal to determine whether they met the “worker” classification and if so, how much each claimant will be awarded. In addition, we expect to be subject to related pension contributions, which will require separate engagement with the UK pension regulator, but the ultimate resolution of this matter, including the amount of any exposure is uncertain. If, as a result of legislation or judicial decisions, we are required to classify Drivers as employees, workers or quasi-employees where those statuses exist, we would incur significant additional expenses for compensating Drivers, including expenses associated with the application of wage and hour laws (including minimum wage, overtime, and meal and rest period requirements), employee benefits, social security contributions, taxes (direct and indirect), and potential penalties. Additionally, we may not have adequate Driver supply as Drivers may opt out of our platform given the loss of flexibility under an employment model, and we may not be able to hire a majority of the Drivers currently using our platform. Any of these events could negatively impact our business, result of operations, financial position, and cash flows. For a discussion of risk factors related to how misclassification challenges may impact our business, result of operations, financial position and operating condition and cash flows, see the risk factor titled “-Our business would be adversely affected if Drivers were classified as employees, workers or quasi-employees” included in Part I, Item 1A, “Risk Factors”, and Note 15 - Commitments and Contingencies to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. In addition, if we are required to classify Drivers as employees, this may impact our current financial statement presentation including revenue, cost of revenue, incentives and promotions as further described in our significant and critical accounting policies in Note 1 - Description of Business and Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” and the section titled “Critical Accounting Policies and Estimates” in Part II, Item 7, of this Annual Report on Form 10-K. 53 Financial and Operational Highlights Year Ended December 31, (In millions, except percentages) 2018 2019 2020 2018 to 2019 % Change 2019 to 2020 % Change 2019 to 2020 % Change (Constant Currency (1) ) Monthly Active Platform Consumers (“MAPCs”) (2), (3) 91 111 93 22 % (16) % Trips (2) 5,220 6,904 5,025 32 % (27) % Gross Bookings (2) $ 49,799 $ 65,001 $ 57,897 31 % (11) % (9) % Revenue (4) $ 10,433 $ 13,000 $ 11,139 25 % (14) % (13) % Net income (loss) attributable to Uber Technologies, Inc. (5) $ 997 $ (8,506) $ (6,768) ** 20 % Mobility Adjusted EBITDA $ 1,541 $ 2,071 $ 1,169 34 % (44) % Delivery Adjusted EBITDA $ (601) $ (1,372) $ (873) (128) % 36 % Adjusted EBITDA (1), (2) $ (1,847) $ (2,725) $ (2,528) (48) % 7 % (1) See the section titled “Reconciliations of Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measure. (2) See the section titled “Certain Key Metrics and Non-GAAP Financial Measures” below for more information. (3) MAPCs presented for annual periods are MAPCs for the fourth quarter of the year. The 2018 MAPCs exclude the impact of our 2018 Divested Operations, defined as operations in (i) Southeast Asia prior to the sale of those operations to Grab and (ii) Russia/CIS prior to the formation of our Yandex.Taxi joint venture. (4) Our previously reported revenue in 2018 and 2019 has been retrospectively adjusted to reflect the implementation of the new accounting presentation policy. Refer to Note 1 - Description of Business and Summary of Significant Accounting Policies to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for further information on the change in accounting policy. (5) Net income (loss) attributable to Uber Technologies, Inc. includes stock-based compensation expense of $172 million, $4.6 billion and $827 million during the years ended December 31, 2018, 2019 and 2020, respectively. ** Percentage not meaningful. Highlights for 2020 Overall Gross Bookings declined by $7.1 billion in 2020, down 11%, or 9% on a constant currency basis, compared to 2019. Mobility Gross Bookings declined 44%, on a constant currency basis, year-over-year from 2019, and ended the fourth quarter down 47%, on a constant currency basis, showing continued recovery from the second quarter year-over-year decline of 73% year-over-year, on a constant currency basis. Delivery Gross Bookings grew 110% from 2019, on a constant currency basis, outpacing Delivery Trip growth driven by a 32% increase in basket sizes globally driven by stay-at-home order demand related to COVID-19. Revenue was $11.1 billion, or down 14% year-over-year, reflecting the impact of COVID-19 on our Mobility business, partially offset by overall growth in our Delivery business. Revenue improved every quarter from the second quarter of 2020, with a Take Rate of 19.2% in 2020. Net loss attributable to Uber Technologies, Inc. was $6.8 billion, a 20% improvement year-over-year, reflecting reductions in our fixed cost structure, as well as increased variable cost efficiencies, and included $827 million of stock-based compensation expense. Adjusted EBITDA loss was $2.5 billion, improving $197 million from 2019 with Mobility Adjusted EBITDA profit of $1.2 billion, despite Mobility Gross Bookings decline of 44%, on a constant currency basis. Additionally, Delivery Adjusted EBITDA loss of $873 million, improved $499 million and Delivery Adjusted EBITDA margin as a percentage of Delivery Revenue improved to (22.4)% from (97.9)%, compared to 2019. We ended the year with $6.8 billion in cash, cash equivalents and short-term investments. 54 2020 Significant Developments Acquisitions Careem On January 2, 2020, we completed the acquisition of substantially all of the assets of Careem Inc. (“Careem”). Dubai-based Careem was founded in 2012, and provides primarily ridesharing and, to a lesser extent, meal delivery, and payments services to millions of users in cities across the Middle East, North Africa, and Pakistan. Cornershop On July 6, 2020, we completed our purchase of a controlling interest in Cornershop Cayman (“Cornershop”) in all jurisdictions where we received regulatory approval or did not require regulatory approval. In January 2021, we obtained regulatory approval in Mexico. Cornershop operates an online grocery delivery platform primarily in Chile and Mexico. Routematch On July 14, 2020, we acquired 100% of the equity of Routematch, a software company offering specialized software and solutions to transit agencies, serving customers in the United States and Australia. The acquisition is expected to accelerate our development in the transit space. Postmates On December 1, 2020, we completed the acquisition of Postmates, Inc. (“Postmates”), an on-demand delivery platform in the United States. The acquisition brings together our global Mobility and Delivery platform with Postmates’ distinctive delivery business in the United States. For additional information on acquisitions, see Note 18 – Business Combinations included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Divestitures Uber Eats India to Zomato On January 21, 2020, we entered into a definitive agreement and completed the divestiture of Uber’s food delivery operations in India (“Uber Eats India”) to Zomato Media Private Limited (“Zomato”) in exchange for (i) compulsorily convertible cumulative preference shares of Zomato representing, when converted, 9.99% of the total voting capital of Zomato and (ii) a non-interest bearing note receivable to be repaid over the course of four years for reimbursement by Zomato of goods and services tax. JUMP and Investment in Lime On May 7, 2020, we entered into a series of transactions and agreements with Neutron Holdings, Inc. dba Lime (“Lime”) including the divestiture of certain assets of our dockless e-bikes and e-scooters business and operations operated as JUMP, which was included in our New Mobility offering. For additional information, see Note 19 - Divestitures included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Note Issuances and Redemption Issuance of 2025 Senior Notes In May 2020, we issued five-year notes with an aggregate principal amount of $1.0 billion due on May 15, 2025 (the “2025 Senior Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Issuance of 2028 Senior Notes In September 2020, we issued eight-year notes with an aggregate principal amount of $500 million due on January 15, 2028 (the “2028 Senior Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act. Redemption of 2023 Senior Notes On October 2020, the net proceeds from the 2028 Senior Notes, along with cash on hand, were used to redeem all of our outstanding 2023 Senior Notes. Issuance of 2025 Convertible Notes In December 2020, we issued $1.15 billion aggregate principal amount of 0% convertible senior notes due in 2025 (the “2025 Convertible Notes”) in a private placement to qualified institutional buyers pursuant to Rule144A under the Securities Act. 55 For additional information, see Note 8 - Long-Term Debt and Revolving Credit Arrangements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K Greenbriar Equity Group, L.P. Investment in Freight On October 1, 2020, we entered into a preferred stock purchase agreement with affiliates of Greenbriar Equity Group, L.P. (“Greenbriar”). Pursuant to the preferred stock purchase agreement, Greenbriar agreed to invest an aggregate of $500 million in Uber Freight Holding Corporation (“Freight Holding”), the holding company for our Uber Freight business, in exchange for Series A convertible preferred stock of Freight Holding. For additional information, see Note 17 - Non-Controlling Interests included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Recent Developments Pending Joint Venture Agreement with SK Telecom In October 2020, we entered into a joint venture agreement with SK Telecom Co., LTD. (“SK Telecom”). Pursuant to this agreement, we and SK Telecom’s mobility business (“Mobility Company”), which will be spun out of SK Telecom prior to the closing of the joint venture, will form a joint venture (the “JV Business”) in South Korea, focused on the business of e-hailing of passenger transportation (including taxis and limousines). Uber has agreed to invest an aggregate of approximately $100 million in the JV Business. At the date of the close of the transaction, we will own a majority stake in the JV Business. The transaction is subject to regulatory approval and other customary closing conditions, including the approval by SK Telecom’s stockholders of the spin-off of Mobility Company, and is expected to close in the first half of 2021. Sale of ATG Business On December 7, 2020, we announced the sale of Apparate USA LLC (“ATG Business” or “Apparate”), our subsidiary focused on the development and commercialization of autonomous vehicle technologies, to Aurora Innovation, Inc. (“Aurora”). Our ATG Business is included within our ATG and Other Technology Programs segment. For additional information, see Note 9 – Assets and Liabilities Held for Sale included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. On January 19, 2021, we completed the sale of our ATG Business to Aurora. Also on January 19, 2021, we made a $400 million cash investment in Aurora and entered into a collaboration agreement with Aurora pursuant to which the parties will collaborate with respect to the launch and commercialization of self-driving vehicles on our ridesharing network. Pending Acquisition of Drizly On February 2, 2021, we entered into a definitive agreement to acquire 100% ownership interest in The Drizly Group, Inc. (“Drizly”), which operates an on-demand alcohol marketplace in North America. The aggregate consideration to be paid by us is estimated to be approximately $1.1 billion, subject to certain adjustments set forth in the definitive agreement payable in a combination of cash and shares of our stock based on a fixed price of approximately $53.16 per share. The transaction is subject to regulatory approval and other customary closing conditions, and is expected to close in the first half of 2021. Equity and Term Loan Investment in Moove On February 12, 2021, we entered into and completed a series of agreements with Garment Investments S.L. dba Moove (“Moove”) including (i) an equity investment in which Uber acquired a 30% minority interest in Moove from its current shareholders for approximately $5 million at closing and up to $185 million contingent on future performance of Moove and certain other conditions through the eighth anniversary of the agreement, (ii) a term loan of up to approximately $230 million to Moove, and (iii) a commercial partnership agreement. Moove is a vehicle fleet operator in Spain. 2016 and 2018 Senior Secured Term Loan Refinancing On February 25, 2021, we entered into a refinancing transaction under which we borrowed $2.6 billion pursuant to an amendment to the 2016 Senior Secured Term Loan agreement, the proceeds of which were used to repay in full all previously outstanding loans under the 2016 Senior Secured Term Loan agreement and the 2018 Senior Secured Term Loan agreement. The $2.6 billion is comprised of (i) a $1.1 billion tranche with a maturity date of February 25, 2027, and (ii) a $1.5 billion tranche with a maturity date of April 4, 2025 (together the “Refinanced 2016 Senior Secured Term Loans”). The interest rate for the Refinanced 2016 Senior Secured Term Loans is LIBOR plus 3.50% per annum, subject to a floor of 0.00%. Components of Results of Operations Change in Accounting Policy During the fourth quarter of 2020, we changed our accounting policy related to the presentation of cumulative payments to Drivers in excess of cumulative revenue from Drivers. Our policy for the presentation of these excess cumulative payments has changed from presenting them within cost of revenue, exclusive of depreciation and amortization, to presenting them as a reduction of revenue in our consolidated statements of operations. As a result, prior period information presented has been retrospectively adjusted to reflect the implementation of the new accounting policy. Refer to Note 1 - Description of Business and Summary of Significant 56 Accounting Policies to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for further information on change in accounting policy. Revenue We generate substantially all of our revenue from fees paid by Drivers and Merchants for use of our platform. We have concluded that we are an agent in these arrangements as we arrange for other parties to provide the service to the end-user. Under this model, revenue is net of Driver and Merchant earnings and Driver incentives. We act as an agent in these transactions by connecting consumers to Drivers and Merchants to facilitate a Trip, meal or grocery delivery service. During the first quarter of 2020, we began charging end-users a fee for Mobility and Delivery services in certain markets. While our contracts and our previously disclosed accounting policy for Mobility Drivers and restaurants remains unchanged, in these markets we subcontract with Delivery People to provide delivery services to end-users. Revenue from restaurants, Mobility Drivers, and end-users is recognized separately, while costs associated with payments to Delivery People are recorded as cost of revenue. For additional discussion related to our revenue, see the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies and Estimates - Revenue Recognition,” “Note 1 - Description of Business and Summary of Significant Accounting Policies - Revenue Recognition,” and “Note 2 - Revenue” to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Cost of Revenue, Exclusive of Depreciation and Amortization Cost of revenue, exclusive of depreciation and amortization, primarily consists of certain insurance costs related to our Mobility and Delivery offerings, credit card processing fees, bank fees, data center and networking expenses, mobile device and service costs, costs incurred for certain Delivery transactions where we are primarily responsible for delivery services and pay Delivery People for services provided, costs incurred with carriers for Uber Freight transportation services, amounts related to fare chargebacks and other credit card losses. We expect that cost of revenue, exclusive of depreciation and amortization, will fluctuate on an absolute dollar basis for the foreseeable future in line with Trip volume changes on the platform. As Trips increase or decrease, we expect related changes for insurance costs, credit card processing fees, hosting and co-located data center expenses, maps license fees, and other cost of revenue, exclusive of depreciation and amortization. Operations and Support Operations and support expenses primarily consist of compensation expenses, including stock-based compensation, for employees that support operations in cities, including the general managers, Driver operations, platform user support representatives and community managers. Also included is the cost of customer support, Driver background checks and the allocation of certain corporate costs. As our business recovers from the impacts of COVID-19 and Trip volume increases, we would expect operations and support expenses to increase on an absolute dollar basis for the foreseeable future, but decrease as a percentage of revenue as we become more efficient in supporting platform users. Sales and Marketing Sales and marketing expenses primarily consist of compensation costs, including stock-based compensation to sales and marketing employees, advertising costs, product marketing costs and discounts, loyalty programs, promotions, refunds, and credits provided to end-users who are not customers, and the allocation of certain corporate costs. We expense advertising and other promotional expenditures as incurred. As our business recovers from the impacts of COVID-19, we would anticipate sales and marketing expenses to increase on an absolute dollar basis for the foreseeable future but vary from period to period as a percentage of revenue due to timing of marketing campaigns. Research and Development Research and development expenses primarily consist of compensation costs, including stock-based compensation, for employees in engineering, design and product development. Expenses includes ATG and Other Technology Programs development expenses, as well as expenses associated with ongoing improvements to, and maintenance of, existing products and services, and allocation of certain corporate costs. We expense substantially all research and development expenses as incurred. We expect research and development expenses to increase and vary from period to period as a percentage of revenue as we continue to invest in research and development activities relating to ongoing improvements to and maintenance of our platform offerings and other research and development programs, offset by a decrease in investments in our ATG and Other Technology Programs subsequent to the divestiture of ATG. 57 General and Administrative General and administrative expenses primarily consist of compensation costs, including stock-based compensation, for executive management and administrative employees, including finance and accounting, human resources, policy and communications, legal, and certain impairment charges, as well as allocation of certain corporate costs, occupancy, and general corporate insurance costs. General and administrative expenses also include certain legal settlements. As our business recovers from the impacts of COVID-19 and Trip volume increases, we expect that general and administrative expenses will increase on an absolute dollar basis for the foreseeable future, but decrease as a percentage of revenue as we find efficiencies in our internal support functions. Depreciation and Amortization Depreciation and amortization expenses primarily consist of depreciation on buildings, site improvements, computer and network equipment, software, leasehold improvements, leased vehicles, furniture and fixtures, and amortization of intangible assets. Depreciation includes expenses associated with buildings, site improvements, computer and network equipment, leased vehicles, and furniture, fixtures, as well as leasehold improvements. Amortization includes expenses associated with our capitalized internal-use software and acquired intangible assets. As our business recovers from the impacts of COVID-19, we would anticipate depreciation and amortization expenses to increase as we continue to build out our network infrastructure and building locations. Interest Expense Interest expense primarily consists of interest expense associated with our outstanding debt, including accretion of debt discount and debt issuance costs. For additional detail related to our debt obligations, see “Note 8 - Long-Term Debt and Revolving Credit Arrangements” to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Other Income (Expense), Net Other income (expense), net primarily includes the following items: • Interest income, which primarily consists of interest earned on our cash and cash equivalents and restricted cash and cash equivalents. • Foreign currency exchange gains (losses), net, which primarily consist of remeasurement of transactions and monetary assets and liabilities denominated in currencies other than the functional currency at the end of the period. • Gain (loss) on business divestitures, net. • Unrealized gain (loss) on debt and equity securities, net, which primarily consists of gains (losses) from fair value adjustments relating to our non-marketable securities. • Change in fair value of embedded derivatives, which primarily consists of gains and losses on embedded derivatives related to our 2021 and 2022 Convertible Notes until their extinguishment in connection with our IPO. • Gain on extinguishment of convertible notes and settlement of derivatives. • Other, net, which primarily consists of changes in the fair value of warrants and income from forfeitures of warrants. Provision for (Benefit from) Income Taxes We are subject to income taxes in the United States and foreign jurisdictions in which we do business. These foreign jurisdictions have different statutory tax rates than those in the United States. Additionally, certain of our foreign earnings may also be taxable in the United States. Accordingly, our effective tax rate will vary depending on the relative proportion of foreign to domestic income, use of foreign tax credits, changes in the valuation of our deferred tax assets, and liabilities and changes in tax laws. Equity Method Investments Equity method investments primarily includes the results of our share of income or loss from our Yandex.Taxi joint venture. 58 Results of Operations The following table summarizes our consolidated statements of operations for each of the periods presented (in millions): Year Ended December 31, 2018 (1) 2019 (1) 2020 Revenue $ 10,433 $ 13,000 $ 11,139 Costs and expenses Cost of revenue, exclusive of depreciation and amortization shown separately below 4,786 6,061 5,154 Operations and support 1,516 2,302 1,819 Sales and marketing 3,151 4,626 3,583 Research and development 1,505 4,836 2,205 General and administrative 2,082 3,299 2,666 Depreciation and amortization 426 472 575 Total costs and expenses 13,466 21,596 16,002 Loss from operations (3,033) (8,596) (4,863) Interest expense (648) (559) (458) Other income (expense), net 4,993 722 (1,625) Income (loss) before income taxes and loss from equity method investments 1,312 (8,433) (6,946) Provision for (benefit from) income taxes 283 45 (192) Loss from equity method investments (42) (34) (34) Net income (loss) including non-controlling interests 987 (8,512) (6,788) Less: net loss attributable to non-controlling interests, net of tax (10) (6) (20) Net income (loss) attributable to Uber Technologies, Inc. $ 997 $ (8,506) $ (6,768) (1) Our revenue and cost of revenue, exclusive of depreciation and amortization for 2018 and 2019 have been retrospectively adjusted to reflect the implementation of our new accounting policy adopted in the fourth quarter of 2020. There was no net impact to loss from operations or net income (loss) attributable to Uber Technologies, Inc. for any periods presented. Refer to Note 1 - Description of Business and Summary of Significant Accounting Policies to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for further information on the change in accounting policy. 59 The following table sets forth the components of our consolidated statements of operations for each of the periods presented as a percentage of revenue (1) : Year Ended December 31, 2018 2019 2020 Revenue 100 % 100 % 100 % Costs and expenses Cost of revenue, exclusive of depreciation and amortization shown separately below 46 % 47 % 46 % Operations and support 15 % 18 % 16 % Sales and marketing 30 % 36 % 32 % Research and development 14 % 37 % 20 % General and administrative 20 % 25 % 24 % Depreciation and amortization 4 % 4 % 5 % Total costs and expenses 129 % 166 % 144 % Loss from operations (29) % (66) % (44) % Interest expense (6) % (4) % (4) % Other income (expense), net 48 % 6 % (15) % Income (loss) before income taxes and loss from equity method investments 13 % (65) % (62) % Provision for (benefit from) income taxes 3 % — % (2) % Loss from equity method investments — % — % — % Net income (loss) including non-controlling interests 9 % (65) % (61) % Less: net loss attributable to non-controlling interests, net of tax — % — % — % Net income (loss) attributable to Uber Technologies, Inc. 10 % (65) % (61) % (1) Totals of percentage of revenues may not foot due to rounding. Comparison of the Years Ended December 31, 2018, 2019 and 2020 Revenue Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 Revenue $ 10,433 $ 13,000 $ 11,139 25 % (14) % 2020 Compared to 2019 Revenue decreased $1.9 billion, or 14%, primarily attributable to a decline in Gross Bookings of 11%, or 9% on a constant currency basis. The decrease in Gross Bookings was primarily driven by a decline in Mobility Gross Bookings of 46%, or 44% on a constant currency basis, due to adverse impacts from COVID-19. The decrease was partially offset by Delivery Gross Bookings growth of 109%, or 110% on a constant currency basis, due to an increase in food delivery orders and higher basket sizes as a result of stay-at-home order demand related to COVID-19. Additionally, we had a one-time Driver appreciation award of $299 million recorded in the 2019, that was not incurred in 2020. 2019 Compared to 2018 Revenue increased $2.6 billion, or 25%, primarily attributable to an increase in Gross Bookings of 31%, or 34%, on a constant currency basis. The overall increase in Gross Bookings was driven by a 22% increase in MAPCs primarily due to global expansion of our Delivery product offerings combined with wider market adoption of our Mobility product, and overall growth in our other offerings. Cost of Revenue, Exclusive of Depreciation and Amortization Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 Cost of revenue, exclusive of depreciation and amortization $ 4,786 $ 6,061 $ 5,154 27 % (15) % Percentage of revenue 46 % 47 % 46 % 60 2020 Compared to 2019 Cost of revenue, exclusive of depreciation and amortization, decreased $907 million, or 15%, mainly due to a $2.0 billion decrease in Mobility driven by COVID-19 related volume declines primarily resulting in lower insurance costs. This decrease was partially offset by a $984 million increase in Delivery primarily related to a $513 million increase in Delivery People payments and incentives in certain markets, combined with a $233 million increase in Freight carrier payments. 2019 Compared to 2018 Cost of revenue, exclusive of depreciation and amortization, increased $1.3 billion, or 27%, primarily attributable to a $543 million increase in insurance costs and credit card processing fees largely due to overall growth in Trips in our Mobility and Delivery businesses, as well as a $374 million increase in Freight carrier payments. Operations and Support Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 Operations and support $ 1,516 $ 2,302 $ 1,819 52 % (21) % Percentage of revenue 15 % 18 % 16 % 2020 Compared to 2019 Operations and support expenses decreased $483 million, or 21%, primarily attributable to a $382 million decrease in stock-based compensation mainly related to RSUs with a performance condition satisfied upon our IPO in 2019, a $175 million decrease in employee headcount costs and a $79 million decrease in external contractor expenses, partially offset by a $172 million increase in restructuring and related charges. 2019 Compared to 2018 Operations and support expenses increased $786 million, or 52%, primarily attributable to a $439 million increase in stock-based compensation mainly related to RSUs with a performance condition satisfied upon our IPO in 2019, a $282 million increase in employee headcount costs. Sales and Marketing Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 Sales and marketing $ 3,151 $ 4,626 $ 3,583 47 % (23) % Percentage of revenue 30 % 36 % 32 % 2020 Compared to 2019 Sales and marketing expenses decreased $1.0 billion, or 23%, primarily attributable to a decrease in discounts, loyalty expenses, promotions, credits and refunds of $446 million to $2.0 billion compared to $2.5 billion in 2019, a decrease of $298 million in consumer advertising and other marketing programs, as well as a $194 million decrease in stock-based compensation related to RSUs with a performance condition satisfied upon our IPO in 2019. 2019 Compared to 2018 Sales and marketing expenses increased $1.5 billion, or 47%, primarily attributable to an increase in discounts, loyalty expenses, promotions, credits and refunds of $1.1 billion to $2.5 billion compared to $1.4 billion in 2018, a $233 million increase in stock-based compensation related to RSUs with a performance condition satisfied upon our IPO in 2019 and a $174 million increase in employee headcount costs. Research and Development Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 Research and development $ 1,505 $ 4,836 $ 2,205 221 % (54) % Percentage of revenue 14 % 37 % 20 % 61 2020 Compared to 2019 Research and development expenses decreased $2.6 billion, or 54%, primarily attributable to a $2.5 billion decrease in stock-based compensation related to RSUs with a performance condition satisfied upon our IPO in 2019, partially offset by an $85 million increase in restructuring and related charges. 2019 Compared to 2018 Research and development expenses increased by $3.3 billion, or 221%. This increase was primarily due to a $2.9 billion increase in stock-based compensation related to RSUs with a performance condition satisfied upon our IPO in 2019 and a $467 million increase in employee headcount costs. General and Administrative Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 General and Administrative $ 2,082 $ 3,299 $ 2,666 58 % (19) % Percentage of revenue 20 % 25 % 24 % 2020 Compared to 2019 General and administrative expenses decreased $633 million, or 19%, primarily attributable to a $712 million decrease in stock-based compensation expense and a net $388 million decrease in legal, tax, and regulatory reserve changes and settlements, partially offset by $193 million in impairment charges related to our New Mobility reporting unit recorded during the first quarter of 2020 primarily related to COVID-19 impacts on certain markets, an $84 million increase in restructuring and related charges, $102 million attributable to accelerated lease expense in 2020 and $52 million in asset impairments. 2019 Compared to 2018 General and administrative expenses increased $1.2 billion, or 58%, primarily attributable to an $859 million increase in stock-based compensation related to RSUs with a performance condition satisfied upon our IPO in 2019 and a $309 million increase in employee headcount costs. Depreciation and Amortization Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 Depreciation and amortization $ 426 $ 472 $ 575 11 % 22 % Percentage of revenue 4 % 4 % 5 % 2020 Compared to 2019 Depreciation and amortization expenses increased $103 million, or 22%, primarily attributable to additional amortization expenses related to newly acquired intangible assets, primarily held by Careem and Postmates, and an increase in leased server depreciation, partially offset by a decrease in depreciation of data center assets. 2019 Compared to 2018 Depreciation and amortization expenses increased $46 million, or 11%, primarily attributable to data center servers depreciation. Interest Expense Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 Interest expense $ (648) $ (559) $ (458) (14) % (18) % Percentage of revenue (6) % (4) % (4) % 2020 Compared to 2019 Interest expense decreased by $101 million, or 18%, primarily due to the conversion of our 2021 and 2022 Convertible Notes upon our IPO in May 2019 and favorable LIBOR rates on our term loans, partially offset by additional interest expense resulting from the issuance of our $1.0 billion 2025 Senior Notes in May 2020, as well as additional bonds issued during 2020. 62 2019 Compared to 2018 Interest expense decreased by $89 million, or 14%, primarily due to the conversion of all our outstanding Convertible Notes into common stock upon our IPO in May 2019, partially offset by additional interest expense resulting from the issuance of our 2023 Senior Notes and our 2026 Senior Notes in October 2018. Other Income (Expense), Net Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 Interest income $ 104 $ 234 $ 55 125 % (76) % Foreign currency exchange gains (losses), net (45) (40) (128) 11 % (220) % Gain on business divestitures, net 3,214 — 204 (100) % ** Unrealized gain (loss) on debt and equity securities, net 1,996 2 (125) (100) % ** Impairment of debt and equity securities — — (1,690) ** ** Change in fair value of embedded derivatives (501) 58 — 112 % (100) % Gain on extinguishment of convertible notes and settlement of derivatives — 444 — ** (100) % Other, net 225 24 59 (89) % 146 % Other income (expense), net $ 4,993 $ 722 $ (1,625) (86) % ** Percentage of revenue 48 % 6 % (15) % ** Percentage not meaningful. 2020 Compared to 2019 Interest income decreased by $179 million or 76% primarily due to declining balances and yields in our money market fund investments, bank deposits, and available-for-sale securities. Foreign currency exchange gains (losses), net increased by $88 million due to unrealized impacts on foreign exchange resulting from remeasurement of our foreign currency monetary assets and liabilities denominated in currencies other than the functional currency of an entity. Gain on business divestitures, net increased by $204 million due to a $154 million gain on the sale of our Uber Eats India operations to Zomato during the first quarter of 2020 and a $77 million gain on the sale of our European Freight Business to sennder GmbH (“Sennder”) recognized in the fourth quarter of 2020, partially offset by a $27 million loss on the sale of our JUMP operations to Lime recognized during the second quarter of 2020. Unrealized gain (loss) on debt and equity securities, net decreased by $127 million primarily due to loss from fair value adjustments of our non-marketable securities recorded under the fair value option. Impairment of debt and equity securities primarily relates to a $1.7 billion impairment of our investment in Didi. For additional information, refer to Note 3 - Investments and Fair Value Measurement included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Change in fair value of embedded derivatives decreased by $58 million as a result of settlement of convertible debts in the second quarter of 2019. Gain on extinguishment of convertible notes and settlement of derivatives decreased by $444 million due to the conversion of our 2021 and 2022 Convertible Notes and settlement of the related derivatives in connection with our IPO during the second quarter of 2019. 2019 Compared to 2018 Interest income increased by $130 million or 125% primarily due to interest income earned on higher average cash balances from the proceeds of our IPO and additional investment from our ATG Investors. Foreign currency exchange gains (losses), net decreased by $5 million due to unrealized impacts on foreign exchange resulting from remeasurement of our foreign currency monetary assets and liabilities denominated in currencies other than the functional currency of an entity. Gain on business divestitures, net decreased by $3.2 billion due to the non-recurrence in 2019 of gains on the divestitures of our Southeast Asia and Russia/CIS operations in 2018. 63 Unrealized gain (loss) on debt and equity securities, net decreased by $2.0 billion primarily due to the non-recurrence in 2019 of a gain from a fair value adjustment of our Didi investment in 2018. Change in fair value of embedded derivatives increased by $559 million as a result of their revaluation, primarily due to changes in discount yield and time to liquidity. Gain on extinguishment of convertible notes and settlement of derivatives increased by $444 million due to the conversion of our 2021 and 2022 Convertible Notes and settlement of the related derivatives in connection with our IPO during the second quarter of 2019. Other, net decreased by $201 million primarily due to non-recurrence in 2019 of income from forfeitures of warrants during the year ended December 31, 2018. Provision for (Benefit from) Income Taxes Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 Provision for (benefit from) income taxes $ 283 $ 45 $ (192) (84) % ** Effective tax rate 21.6 % (0.5) % 2.8 % ** Percentage not meaningful. 2020 Compared to 2019 Provision for income taxes decreased by $237 million primarily due to a tax impact from the impairment charge of our investment in Didi. 2019 Compared to 2018 Provision for income taxes decreased by $238 million, primarily driven by the deferred U.S. tax expense related to our investment in Didi and Grab and deferred China tax related to our investment in Didi incurred during the first quarter of 2018. In March 2019, we initiated a series of transactions resulting in changes to our international legal structure, including a redomiciliation of a subsidiary to the Netherlands and a transfer of certain intellectual property rights among our wholly-owned subsidiaries, primarily to align our structure to our evolving operations. The redomiciliation resulted in a step-up in the tax basis of intellectual property rights and a correlated increase in foreign deferred tax assets in an amount of $6.4 billion, net of a reserve for uncertain tax positions of $1.4 billion. Based on available objective evidence, we believed it was not more-likely-than-not that these additional foreign deferred tax assets would be realizable as of December 31, 2019 and, therefore, they were offset by a full valuation allowance to the extent not offset by reserves from uncertain tax positions. Loss from Equity Method Investments Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 Loss from equity method investments $ (42) $ (34) $ (34) 19 % — % Percentage of revenue — % — % — % ** Percentage not meaningful. 2019 Compared to 2018 Loss from equity method investments decreased by $8 million due to a decrease in our portion of the net loss from our Yandex.Taxi joint venture and amortization expense on intangible assets resulting from the basis difference in this investment. Supplemental Disclosure Related to Restructuring and Related Charges During the second quarter of 2020, we initiated and completed certain restructuring activities in order to reduce our overall cost structure in response to the economic challenges and uncertainty resulting from the COVID-19 pandemic and its impact on our business. We also exited the JUMP business and incurred costs related to site closures, asset impairments and write-offs. As a result, during the year ended December 31, 2020, we recognized $362 million in total restructuring and related charges in the consolidated statement of operations. Total restructuring and related charges included $248 million of cash settled charges, primarily for severance and other termination benefits. The remaining costs related to these restructuring activities are expected to be immaterial. Restructuring activities during the years ended December 31, 2018 and 2019 were not material. These activities were designed to generate an aggregate cost savings of at least $1.0 billion annually when compared to our original fourth quarter 2020 planned cost structure, with the largest component of savings resulting from reductions in workforce. We do not believe these cost-saving measures will impair our ability to conduct any of our key business functions. There is no guarantee 64 that we will achieve the cost savings that we expect. Refer to Note 20 – Restructuring and Related Charges in the notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Segment Results of Operations We operate our business as four operating and reportable segments: Mobility, Delivery, Freight, and ATG and Other Technology Programs. For additional information about our segments, see Note 14 - Segment Information and Geographic Information in the notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Revenue Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 (1) 2019 (1) 2020 Mobility (2) $ 9,288 $ 10,707 $ 6,089 15 % (43) % Delivery 772 1,401 3,904 81 % 179 % Freight 356 731 1,011 105 % 38 % ATG and Other Technology Programs (3) — 42 100 ** 138 % All Other 17 119 35 ** (71) % Total revenue $ 10,433 $ 13,000 $ 11,139 25 % (14) % (1) Our previously reported revenue in 2018 and 2019 has been retrospectively adjusted to reflect the implementation of the new accounting policy. Refer to Note 1 - Description of Business and Summary of Significant Accounting Policies to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for further information on the change in accounting policy. (2) Mobility revenue includes revenue recognized as an operating lease as defined under ASC 840 for 2018 and ASC 842 for 2019 and 2020. Total revenue recognized under ASC 840 and ASC 842 for the years ended December 31, 2018, 2019 and 2020 was $151 million, $88 million, and $21 million, respectively. For additional information, see Note 2 - Revenue to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. (3) Consists of $42 million and $100 million, respectively, in collaboration revenue from Toyota recognized for the years ended December 31, 2019 and 2020. For additional information, see Note 17 - Non-Controlling Interests to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. ** Percentage not meaningful. Segment Adjusted EBITDA Segment Adjusted EBITDA is defined as revenue less the following expenses: cost of revenue, exclusive of depreciation and amortization, operations and support, sales and marketing, and general and administrative and research and development expenses associated with our segments. Segment adjusted EBITDA also excludes non-cash items, certain transactions that are not indicative of ongoing segment operating performance and / or items that management does not believe are reflective of our ongoing core operations. For additional information, see Note 14 - Segment Information and Geographic Information to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Year Ended December 31, 2018 vs. 2019 % Change 2019 vs. 2020 % Change (In millions, except percentages) 2018 2019 2020 Mobility $ 1,541 $ 2,071 $ 1,169 34 % (44) % Delivery (601) (1,372) (873) (128) % 36 % Freight (102) (217) (227) (113) % (5) % ATG and Other Technology Programs (537) (499) (375) 7 % 25 % All Other (50) (251) (86) ** 66 % Corporate G&A and Platform R&D (1), (2) (1,971) (2,457) (2,136) (25) % 13 % Impact of 2018 Divested Operations (1) (127) — — ** ** Adjusted EBITDA (3) $ (1,847) $ (2,725) $ (2,528) (48) % 7 % (1 ) Excluding stock-based compensation expense. (2) Includes costs that are not directly attributable to our reportable segments. Corporate G&A also includes certain shared costs such as finance, accounting, tax, human resources, information technology and legal costs. Platform R&D also includes mapping 65 and payment technologies and support and development of the internal technology infrastructure. Our allocation methodology is periodically evaluated and may change. (3) See the section titled “Reconciliations of Non-GAAP Financial Measures” for more information and reconciliations to the most directly comparable GAAP financial measure. ** Percentage not meaningful. Mobility Segment For the year ended December 31, 2020 compared to the same period in 2019, Mobility revenue decreased $4.6 billion, or 43% and Mobility adjusted EBITDA profit decreased $902 million, or 44%. Mobility revenue decreased primarily attributable to a decrease in Mobility Gross Bookings due to adverse impacts from the COVID-19 pandemic, partially offset by rationalization in incentive spend. Mobility Take Rate improved to 22.9% from 21.5% compared to 2019 mainly driven by an overall decrease in incentive spend as well as a one-time Driver appreciation award recorded in the second quarter of 2019. Mobility adjusted EBITDA profit decreased primarily attributable to a decrease in Mobility revenue, partially offset by a $1.4 billion decrease in insurance expense as a result of a decrease in miles driven, a $961 million decrease in consumer promotions, and a $516 million decrease in credit card processing costs. Additionally, Mobility adjusted EBITDA margin as a percentage of Mobility revenue declined to 19.2% from 19.3% compared to 2019. For the year ended December 31, 2019 compared to the same period in 2018, Mobility revenue increased $1.4 billion, or 15% and Mobility adjusted EBITDA profit increased $530 million, or 34%. Mobility revenue increased primarily attributable to U.S. pricing changes effective in the second and third quarter of 2019 and deeper penetration into international markets, partially offset by a Driver appreciation award. Mobility Take Rate decreased to 21.5% from 22.4% compared to the same period in 2018 driven by an increase in incentive spend in Latin America. Mobility adjusted EBITDA profit increased primarily attributable to an increase in Mobility revenue partially offset by an increase in consumer promotions and variable costs attributable to the overall growth of the business. Delivery Segment For the year ended December 31, 2020 compared to the same period in 2019, Delivery revenue increased 2.5 billion, or 179% and Delivery adjusted EBITDA loss decreased $499 million, or 36%. Delivery revenue increased primarily attributable to an increase in Delivery Gross Bookings of 110%, on a constant currency basis, driven by an increase in food delivery orders and higher basket sizes as a result of stay-at-home demand related to COVID-19. Delivery Take Rate improved to 12.9% from 9.7% compared to the same period in 2019 driven by a decrease in incentive spend combined with an overall improvement in basket sizes. Additionally, the increase in Delivery revenue and Delivery Take Rate resulted from an increase in certain Delivery People payments and incentives that are recorded in cost of revenue, where we are primarily responsible for delivery services and pay Delivery People for services provided. Delivery adjusted EBITDA loss decreased primarily attributable to an increase in Delivery revenue, partially offset by a $965 million increase in cost of revenue as well as a $550 million increase in consumer promotions. For the year ended December 31, 2019 compared to the same period in 2018, Delivery revenue increased $629 million, or 81% and Delivery adjusted EBITDA loss increased $771 million, or 128%. Delivery revenue increased primarily attributable to an increase in Delivery Gross Bookings of 87%, on a constant currency basis mainly due to changes to our service fees in U.S. and Canada and continued expansion into international markets. These increases were partially offset by a one-time Driver appreciation award as well as higher Delivery People incentive spend, primarily in our international markets. Delivery adjusted EBITDA loss increased primarily attributable to an increase in consumer promotions, brand marketing, and employee headcount costs. Freight Segment For the year ended December 31, 2020 compared to the same period in 2019, Freight revenue increased $280 million, or 38% and Freight adjusted EBITDA loss increased $10 million, or 5%. Freight revenue increased primarily attributable to growth in the number of shippers and carriers on the network combined with an increase in volumes with our top shippers. Freight adjusted EBITDA loss increased attributable to an increase in investment spend in our technology and services as we continue to grow the business. 66 For the year ended December 31, 2019 compared to the same period in 2018, Freight revenue increased $375 million, or 105% and Freight adjusted EBITDA loss increased $115 million, or 113%. Freight revenue increased primarily attributable to an increase in load volume over 100% domestically as the business expanded the number of shippers and carriers on the network despite industry-wide conditions that have led to a decline in revenue per load. Freight adjusted EBITDA loss increased attributable to an increase in investment spend in our technology and services as we continue to grow the business. ATG and Other Technology Programs Segment For the year ended December 31, 2020 compared to the same period in 2019, ATG and Other Technology Programs revenue increased $58 million, or 138% and ATG and Other Technology Programs adjusted EBITDA loss decreased $124 million, or 25%. ATG and Other Technology Programs revenue increased attributable to collaboration revenue related to our three-year joint collaboration agreement with Toyota and DENSO entered into in July 2019. ATG and Other Technology Programs adjusted EBITDA loss decreased due to an increase in revenue, as noted above, partially offset by an increase in operational expenses. For the year ended December 31, 2019 compared to the same period in 2018, ATG and Other Technology Programs revenue increased $42 million, and ATG and Other Technology Programs adjusted EBITDA loss decreased $38 million, or 7%. ATG and Other Technology Programs revenue increased attributable to collaboration revenue related to our three-year joint collaboration agreement with Toyota and DENSO entered into in July 2019. ATG and Other Technology Programs adjusted EBITDA loss decreased due to an increase in revenue, as noted above, partially offset by an increase in operational expenses. All Other For the year ended December 31, 2020 compared to the same period in 2019, All Other revenue decreased $84 million, or 71% and All Other adjusted EBITDA loss decreased $165 million, or 66%. All Other revenue and All Other adjusted EBITDA loss decreased primarily due to the JUMP Divestiture in the second quarter of 2020. For the year ended December 31, 2019 compared to the same period in 2018, All Other revenue increased $102 million, and All Other adjusted EBITDA loss increased $201 million. All Other revenue increased as we continue to expand the reach of our New Mobility offerings. All Other adjusted EBITDA loss increased attributable to an increase in investment spend in our New Mobility offerings as we continue to launch in new cities. 67 Certain Key Metrics and Non-GAAP Financial Measures Adjusted EBITDA and Adjusted EBITDA margin as a percentage of revenue, as well as revenue growth rates in constant currency, are non-GAAP financial measures. For more information about how we use these non-GAAP financial measures in our business, the limitations of these measures, and reconciliations of these measures to the most directly comparable GAAP financial measures, see the section titled “Reconciliations of Non-GAAP Financial Measures.” Monthly Active Platform Consumers. MAPCs is the number of unique consumers who completed a Mobility or New Mobility ride or received a Delivery meal or grocery order on our platform at least once in a given month, averaged over each month in the quarter. While a unique consumer can use multiple product offerings on our platform in a given month, that unique consumer is counted as only one MAPC. We use MAPCs to assess the adoption of our platform and frequency of transactions, which are key factors in our penetration of the countries in which we operate. Trips. We define Trips as the number of completed consumer Mobility or New Mobility rides and Delivery meal or grocery deliveries in a given period. For example, an UberPOOL ride with three paying consumers represents three unique Trips, whereas an UberX ride with three passengers represents one Trip. We believe that Trips are a useful metric to measure the scale and usage of our platform. 68 Gross Bookings. We define Gross Bookings as the total dollar value, including any applicable taxes, tolls, and fees, of Mobility and New Mobility rides, Delivery meal or grocery deliveries, and amounts paid by Freight shippers, in each case without any adjustment for consumer discounts and refunds, Driver and Merchant earnings, and Driver incentives. Gross Bookings do not include tips earned by Drivers. Gross Bookings are an indication of the scale of our current platform, which ultimately impacts revenue. (In millions) Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Mobility $ 11,446 $ 12,188 $ 12,554 $ 13,512 $ 10,874 $ 3,046 $ 5,905 $ 6,789 Delivery 3,071 3,386 3,658 4,374 4,683 6,961 8,550 10,050 Freight 128 167 223 219 198 212 290 313 All Other 4 15 30 26 21 5 — — Take Rate is defined as revenue as a percentage of Gross Bookings. Adjusted EBITDA. See the section titled “Reconciliations of Non-GAAP Financial Measures” for our definition and a reconciliation of net income (loss) attributable to Uber Technologies, Inc. to Adjusted EBITDA. Year Ended December 31, 2018 to 2019 % Change 2019 to 2020 % Change (In millions, except percentages) 2018 2019 2020 Adjusted EBITDA $ (1,847) $ (2,725) $ (2,528) (48) % 7 % 2020 Compared to 2019 Adjusted EBITDA loss decreased $197 million, or 7%, primarily attributable to a $499 million improvement in Delivery Adjusted EBITDA, a $321 million decrease in Corporate G&A and Platform R&D costs as well as the favorable impact of $165 million related to the JUMP Divestiture that occurred in the second quarter of 2020. These impacts were partially offset by a $902 million decrease in Mobility Adjusted EBITDA. Reconciliations of Non-GAAP Financial Measures We collect and analyze operating and financial data to evaluate the health of our business and assess our performance. In addition to revenue, net income (loss), loss from operations, and other results under GAAP, we use Adjusted EBITDA and Adjusted EBITDA margin as a percentage of revenue as well as revenue growth rates in constant currency, which are described below, to evaluate our business. We have included these non-GAAP financial measures because they are key measures used by our management to evaluate our operating performance. Accordingly, we believe that these non-GAAP financial measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. Our calculation of these non-GAAP financial measures may differ from similarly-titled non-GAAP measures, if any, reported by our peer companies. These non-GAAP financial measures should not be considered in isolation from, or as substitutes for, financial information prepared in accordance with GAAP. Adjusted EBITDA We define Adjusted EBITDA as net income (loss), excluding (i) income (loss) from discontinued operations, net of income taxes, (ii) net income (loss) attributable to non-controlling interests, net of tax, (iii) provision for (benefit from) income taxes, (iv) income (loss) from equity method investments, (v) interest expense, (vi) other income (expense), net, (vii) depreciation and amortization, (viii) 69 stock-based compensation expense, (ix) certain legal, tax, and regulatory reserve changes and settlements, (x) goodwill and asset impairments/loss on sale of assets, (xi) acquisition and financing related expenses, (xii) restructuring and related charges and (xiii) other items not indicative of our ongoing operating performance, including COVID-19 response initiatives related payments for financial assistance to Drivers personally impacted by COVID-19, the cost of personal protective equipment distributed to Drivers, Driver reimbursement for their cost of purchasing personal protective equipment, the costs related to free rides and food deliveries to healthcare workers, seniors, and others in need as well as charitable donations. We have included Adjusted EBITDA in this Annual Report on Form 10-K because it is a key measure used by our management team to evaluate our operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses. Accordingly, we believe that Adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management team and board of directors. In addition, it provides a useful measure for period-to-period comparisons of our business, as it removes the effect of certain non-cash expenses and certain variable charges. To help our board, management and investors assess the impact of COVID-19 pandemic on our results of operations, we are excluding the impacts of COVID-19 response initiatives related payments for financial assistance to Drivers personally impacted by COVID-19, the cost of personal protective equipment distributed to Drivers, Driver reimbursement for their cost of purchasing personal protective equipment, the costs related to free rides and food deliveries to healthcare workers, seniors, and others in need as well as charitable donations from Adjusted EBITDA. Our board and management find the exclusion of the impact of these COVID-19 response initiatives from Adjusted EBITDA to be useful because it allows us and our investors to assess the impact of these response initiatives on our results of operations. COVID-19 Response Initiatives To support those whose earning opportunities have been depressed as a result of COVID-19, as well as communities hit hard by the pandemic, we have announced and implemented several initiatives, including, in particular, payments for financial assistance to Drivers personally impacted by COVID-19, the cost of personal protective equipment distributed to Drivers, Driver reimbursement for their cost of purchasing personal protective equipment, the costs related to free rides and food deliveries to healthcare workers, seniors, and others in need as well as charitable donations. The payments for financial assistance to Drivers personally impacted by COVID-19 and Driver reimbursement for their cost of purchasing personal protective equipment are recorded as a reduction to revenue. The cost of personal protective equipment distributed to Drivers, the costs related to free rides and food deliveries to healthcare workers, seniors, and others in need as well as charitable donations are recorded as an expense in our costs and expenses. Limitations of Non-GAAP Financial Measures and Adjusted EBITDA Reconciliation Adjusted EBITDA has limitations as a financial measure, should be considered as supplemental in nature, and is not meant as a substitute for the related financial information prepared in accordance with GAAP. These limitations include the following: • Adjusted EBITDA excludes certain recurring, non-cash charges, such as depreciation of property and equipment and amortization of intangible assets, and although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • Adjusted EBITDA excludes certain restructuring and related charges, part of which may be settled in cash; • Adjusted EBITDA excludes stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy; • Adjusted EBITDA excludes other items not indicative of our ongoing operating performance, including COVID-19 response initiatives related payments for financial assistance to Drivers personally impacted by COVID-19, the cost of personal protective equipment distributed to Drivers, Driver reimbursement for their cost of purchasing personal protective equipment, the costs related to free rides and food deliveries to healthcare workers, seniors, and others in need as well as charitable donations; • Adjusted EBITDA does not reflect period to period changes in taxes, income tax expense or the cash necessary to pay income taxes; • Adjusted EBITDA does not reflect the components of other income (expense), net, which primarily includes: interest income; foreign currency exchange gains (losses), net; gain (loss) on business divestitures, net; and unrealized gain (loss) on debt and equity securities, net;, and impairment of debt and equity securities; and • Adjusted EBITDA excludes certain legal, tax, and regulatory reserve changes and settlements that may reduce cash available to us. 70 The following table presents a reconciliation of net income (loss) attributable to Uber Technologies, Inc., the most directly comparable GAAP financial measure, to Adjusted EBITDA for each of the periods indicated: Year Ended December 31, (In millions) 2018 2019 2020 Adjusted EBITDA reconciliation: Net income (loss) attributable to Uber Technologies, Inc. $ 997 $ (8,506) $ (6,768) Add (deduct): Net income (loss) attributable to non-controlling interests, net of tax (10) (6) (20) Provision for (benefit from) income taxes 283 45 (192) Loss from equity method investments 42 34 34 Interest expense 648 559 458 Other (income) expense, net (4,993) (722) 1,625 Depreciation and amortization 426 472 575 Stock-based compensation expense 172 4,596 827 Legal, tax, and regulatory reserve changes and settlements 340 353 (35) Driver appreciation award — 299 — Payroll tax on IPO stock-based compensation — 86 — Goodwill and asset impairments/loss on sale of assets 237 8 317 Acquisition, financing and divestitures related expenses 15 — 86 Accelerated lease costs related to cease-use of ROU assets — — 102 COVID-19 response initiatives — — 106 Gain on lease arrangement, net (4) — (5) Restructuring and related charges, net — 57 362 Adjusted EBITDA $ (1,847) $ (2,725) $ (2,528) The comparability of the results for the periods presented above was impacted by our 2018 Divested Operations. During the year ended December 31, 2018, the 2018 Divested Operations unfavorably impacted net income (loss) attributable to Uber Technologies, Inc. by $127 million. Adjusted EBITDA Margin as a Percentage of Revenue We define Adjusted EBITDA margin as a percentage of revenue as Adjusted EBITDA divided by revenue. Constant Currency We compare the percent change in our current period results from the corresponding prior period using constant currency disclosure. We present constant currency growth rate information to provide a framework for assessing how our underlying revenue performed excluding the effect of foreign currency rate fluctuations. We calculate constant currency by translating our current period financial results using the corresponding prior period’s monthly exchange rates for our transacted currencies other than the U.S. dollar. Selected Quarterly Financial Data The following tables set forth our unaudited selected quarterly financial data for each of the quarters indicated. This unaudited selected quarterly financial data has been prepared on the same basis as our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. In the opinion of management, the financial data set forth in the tables below reflect all normal recurring adjustments necessary for the fair statement of results of operations for these periods. Our historical results are not necessarily indicative of the results that may be expected in the future and the results of a particular quarter or other interim period are not necessarily indicative of the results for a full year. This financial data should be read in conjunction with the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. 71 Quarterly Consolidated Statements of Operations Three Months Ended March 31, 2019 June 30, 2019 Sept. 30, 2019 Dec. 31, 2019 March 31, 2020 June 30, 2020 Sept. 30, 2020 Dec. 31, 2020 (In millions, except per share amounts) Revenue (1) $ 2,796 $ 2,903 $ 3,554 $ 3,747 $ 3,248 $ 1,913 $ 2,813 $ 3,165 Costs and expenses Cost of revenue, exclusive of depreciation and amortization shown separately below (1) 1,378 1,477 1,601 1,605 1,491 924 1,298 1,441 Operations and support (2) 434 864 498 506 503 582 365 369 Sales and marketing (2) 1,040 1,222 1,113 1,251 885 736 924 1,038 Research and development (2) 409 3,064 755 608 645 584 493 483 General and administrative (2) 423 1,638 591 647 859 565 711 531 Depreciation and amortization 146 123 102 101 128 129 138 180 Total costs and expenses 3,830 8,388 4,660 4,718 4,511 3,520 3,929 4,042 Loss from operations (1,034) (5,485) (1,106) (971) (1,263) (1,607) (1,116) (877) Interest expense (217) (151) (90) (101) (118) (110) (112) (118) Other income (expense), net (3) 260 398 49 15 (1,795) (44) 151 63 Loss before income taxes and loss from equity method investments (991) (5,238) (1,147) (1,057) (3,176) (1,761) (1,077) (932) Provision for (benefit from) income taxes 19 (2) 3 25 (242) 4 23 23 Loss from equity method investments, net of tax (6) (10) (9) (9) (12) (7) (8) (7) Net loss including non-controlling interests (1,016) (5,246) (1,159) (1,091) (2,946) (1,772) (1,108) (962) Less: net income (loss) attributable to non-controlling interests, net of tax (4) (10) 3 5 (10) 3 (19) 6 Net loss attributable to Uber Technologies, Inc. $ (1,012) $ (5,236) $ (1,162) $ (1,096) $ (2,936) $ (1,775) $ (1,089) $ (968) Net loss per share attributable to Uber Technologies, Inc. common stockholders: Basic $ (2.23) $ (4.72) $ (0.68) $ (0.64) $ (1.70) $ (1.02) $ (0.62) $ (0.54) Diluted $ (2.26) $ (4.72) $ (0.68) $ (0.64) $ (1.70) $ (1.02) $ (0.62) $ (0.54) (1) During the fourth quarter of 2020, we changed our accounting policy related to the presentation of cumulative payments to Drivers in excess of cumulative revenue from Drivers. Our policy for the presentation of these excess cumulative payments has changed from presenting them within cost of revenue, exclusive of depreciation and amortization, to presenting them as a reduction of revenue in our consolidated statements of operations. Refer to Note 1 - Description of Business and Summary of Significant Accounting Policies for further information on change in accounting policy. As a result, our revenue and cost of revenue for the first three quarters of 2020 and all quarters of 2019 have been retrospectively adjusted. The effect of the change by quarter is as follows: 72 Three Months Ended March 31, 2019 June 30, 2019 Sept. 30, 2019 Dec. 31, 2019 March 31, 2020 June 30, 2020 Sept. 30, 2020 Dec. 31, 2020 (In millions) Revenue: As previously reported* $ 3,099 $ 3,166 $ 3,813 $ 4,069 $ 3,543 $ 2,241 $ 3,129 $ 3,509 Effect of change (303) (263) (259) (322) (295) (328) (316) (344) As Adjusted $ 2,796 $ 2,903 $ 3,554 $ 3,747 $ 3,248 $ 1,913 $ 2,813 $ 3,165 Cost of revenue, exclusive of depreciation and amortization: As previously reported* $ 1,681 $ 1,740 $ 1,860 $ 1,927 $ 1,786 $ 1,252 $ 1,614 $ 1,785 Effect of change (303) (263) (259) (322) (295) (328) (316) (344) As Adjusted $ 1,378 $ 1,477 $ 1,601 $ 1,605 $ 1,491 $ 924 $ 1,298 $ 1,441 *As previously reported through September 30, 2020 and as would have been reported under our pre-existing accounting presentation policy in the quarter ended December 31, 2020. (2) The three months ended June 30, 2019 includes $3.6 billion of stock-based compensation expense for awards with a performance-based vesting condition satisfied upon our IPO. For additional information on our IPO, see Note 11 - Stockholders' Equity in the notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. The three months ended June 30, 2020, includes a $111 million reversal, included in and offsetting stock-based compensation expense, related to forfeitures of awards for employees that were part of the second quarter 2020 restructuring. The following table sets forth the stock-based compensation expense for each of the quarters indicated: Three Months Ended March 31, 2019 June 30, 2019 Sept. 30, 2019 Dec. 31, 2019 March 31, 2020 June 30, 2020 Sept. 30, 2020 Dec. 31, 2020 (In millions) Operations and support $ 1 $ 404 $ 26 $ 23 $ 25 $ 11 $ 16 $ 20 Sales and marketing 1 212 16 13 14 10 11 13 Research and development 3 2,557 262 136 167 72 102 136 General and administrative 6 768 97 71 71 38 54 67 Total $ 11 $ 3,941 $ 401 $ 243 $ 277 $ 131 $ 183 $ 236 (3) The three months ended March 31, 2020 includes an impairment charge of $1.7 billion, primarily related to our investment in Didi. For additional information, see Note 3 - Investments and Fair Value Measurement to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. 73 Quarterly Consolidated Statements of Operations, as a Percentage of Revenue (1) Three Months Ended March 31, 2019 June 30, 2019 Sept. 30, 2019 Dec. 31, 2019 March 31, 2020 June 30, 2020 Sept. 30, 2020 Dec. 31, 2020 Revenue 100 % 100 % 100 % 100 % 100 % 100 % 100 % 100 % Costs and expenses Cost of revenue, exclusive of depreciation and amortization shown separately below 49 % 51 % 45 % 43 % 46 % 48 % 46 % 46 % Operations and support 16 % 30 % 14 % 14 % 15 % 30 % 13 % 12 % Sales and marketing 37 % 42 % 31 % 33 % 27 % 38 % 33 % 33 % Research and development 15 % 106 % 21 % 16 % 20 % 31 % 18 % 15 % General and administrative 15 % 56 % 17 % 17 % 26 % 30 % 25 % 17 % Depreciation and amortization 5 % 4 % 3 % 3 % 4 % 7 % 5 % 6 % Total costs and expenses 137 % 289 % 131 % 126 % 139 % 184 % 140 % 128 % Loss from operations (37) % (189) % (31) % (26) % (39) % (84) % (40) % (28) % Interest expense (8) % (5) % (3) % (3) % (4) % (6) % (4) % (4) % Other income (expense), net 9 % 14 % 1 % — % (55) % (2) % 5 % 2 % Loss before income taxes and loss from equity method investments (35) % (180) % (32) % (28) % (98) % (92) % (38) % (29) % Provision for (benefit from) income taxes 1 % — % — % 1 % (7) % — % 1 % 1 % Loss from equity method investments, net of tax — % — % — % — % — % — % — % — % Net loss including non-controlling interests (36) % (181) % (33) % (29) % (91) % (93) % (39) % (30) % Less: net income (loss) attributable to non-controlling interests, net of tax — % — % — % — % — % — % (1) % — % Net loss attributable to Uber Technologies, Inc. (36) % (180) % (33) % (29) % (90) % (93) % (39) % (31) % (1) Totals of percentage of revenues may not foot due to rounding. Liquidity and Capital Resources Year Ended December 31, (In millions) 2018 2019 2020 Net cash used in operating activities $ (1,541) $ (4,321) $ (2,745) Net cash used in investing activities (695) (790) (2,869) Net cash provided by financing activities 4,640 8,939 1,379 Operating Activities Net cash used in operating activities was $2.7 billion for the year ended December 31, 2020, primarily consisting of $6.8 billion of net loss, adjusted for certain non-cash items, which primarily included $1.7 billion in impairment of non-marketable equity securities, $827 million of stock-based compensation expense, depreciation and amortization expense of $575 million, $404 million in impairment of goodwill, long-lived assets and other assets, as well as a $393 million decrease in cash consumed by working capital. The decrease in cash consumed by working capital and other operating activities was primarily driven by a decrease in our operating lease right-of-use assets, prepaid expenses and other assets and increase in accrued expenses and other liabilities, partially offset by lower accounts payable and operating lease liabilities. Net cash used in operating activities was $4.3 billion for the year ended December 31, 2019 , primarily consisting of $8.5 billion of net loss, adjusted for certain non-cash items, which primarily included $4.6 billion of stock-based compensation expense, $444 million of gain on extinguishment of convertible notes, $58 million of revaluation gain of our derivative liabilities, depreciation and amortization expense of $472 million, $82 million in accretion of discount on our long-term debt, as well as $1.2 billion withdrawal of collateral from restricted cash from James River and a $699 million decrease in cash consumed by working capital. The decrease in cash consumed by working capital was primarily driven by an increase in our insurance reserve, accrued expenses and other liabilities, partially offset by higher accounts receivable and prepaid expenses. 74 Net cash used in operating activities was $1.5 billion for the year ended December 31, 2018, primarily consisting of $1.0 billion of net income, adjusted for certain non-cash items, which primarily included a $3.2 billion gain on business divestitures related to our 2018 Divested Operations, unrealized gain on investment of $2.0 billion related to our investment in Didi, $501 million of revaluation expense of our derivative liabilities, depreciation and amortization expense of $426 million, $318 million in accretion of discount on our long-term debt, impairment of long-lived assets held for sale of $197 million, and $170 million of stock-based compensation expense, as well as an $890 million decrease in cash consumed by working capital primarily driven by an increase in our insurance reserves and accrued expenses, partially offset by higher accounts receivable and prepaid expenses. Investing Activities Net cash used in investing activities was $2.9 billion for the year ended December 31, 2020, primarily consisting of $2.1 billion in purchases of marketable securities, $1.5 billion in acquisition of businesses, net of cash acquired and $616 million in purchases of property and equipment, partially offset by proceeds from maturities and sales of marketable securities of $1.4 billion. Net cash used in investing activities was $790 million for the year ended December 31, 2019, primarily consisting of $588 million in purchases of property and equipment and $441 million in purchases of marketable securities, partially offset by $293 million in proceeds from business disposal, net of cash divested. Net cash used in investing activities was $695 million for the year ended December 31, 2018, primarily consisting of $412 million contributed to equity method investees and $558 million in purchases of property and equipment, partially offset by $369 million of proceeds from sales and disposals of property and equipment. Financing Activities Net cash provided by financing activities was $1.4 billion for the year ended December 31, 2020, primarily consisting of $2.6 billion of proceeds from issuance of notes, net of issuance costs and $247 million of proceeds from issuance of subsidiary preferred stock units, partially offset by $891 million of principal repayment on Careem Notes and $527 million of principal repayment on term loan and notes. Net cash provided by financing activities was $8.9 billion for the year ended December 31, 2019, primarily consisting of $8.0 billion of proceeds from issuance of common stock upon our IPO, net of offering costs, $1.2 billion of proceeds from issuance of term loan and senior notes, net of issuance costs, and $500 million of proceeds from issuance of common stock in private placement, partially offset by $1.6 billion taxes paid related to net share settlement of equity awards to satisfy tax withholding requirements and $138 million of principal payments on capital and finance leases. Net cash provided by financing activities was $4.6 billion for the year ended December 31, 2018, primarily consisting of $3.5 billion from issuance of term loan and senior notes, net of issuance costs, $1.8 billion in proceeds from the issuance of redeemable convertible preferred stock, net of issuance costs, partially offset by $491 million of principal repayment on revolving lines of credit. Other Information As of December 31, 2020, $1.8 billion of our $5.6 billion in cash and cash equivalents was held by our foreign subsidiaries. Cash held outside the United States may be repatriated, subject to certain limitations, and would be available to be used to fund our domestic operations. However, repatriation of funds may result in immaterial tax liabilities. We believe that our existing cash balance in the United States is sufficient to fund our working capital needs in the United States. We are in compliance with our debt and line of credit covenants as of December 31, 2020, including by meeting our reporting obligations. We also believe that our sources of funding and our available line of credit will be sufficient to satisfy our currently anticipated cash requirements including capital expenditures, working capital requirements, potential acquisitions, potential prepayments of contested indirect tax assessments (“pay-to-play”), and other liquidity requirements through at least the next 12 months. We intend to continue to evaluate and may, in certain circumstances, take preemptive action to preserve liquidity during the COVID-19 pandemic. As the circumstances around the COVID-19 pandemic remain uncertain, we continue to actively monitor the pandemic's impact to us worldwide including our financial position, liquidity, results of operations and cash flows. Off-Balance Sheet Arrangements As of December 31, 2020, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenue, or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors. 75 Contractual Obligations The following table summarizes our contractual obligations as of December 31, 2020: Payments Due by Period (In millions) Total Less than 1 Year 1-3 Years 3-5 Years More than 5 years Long-term debt (1) $ 7,914 $ 27 $ 1,120 $ 3,567 $ 3,200 Financing obligation (2) 851 6 12 13 820 Operating lease commitments (2) 3,832 223 634 514 2,461 Finance lease commitments (2) 315 189 126 — — Non-cancelable purchase obligations (3) 516 187 291 38 — Total contractual obligations $ 13,428 $ 632 $ 2,183 $ 4,132 $ 6,481 (1) Refer to Note 8 - Long-Term Debt and Revolving Credit Arrangements of Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for further details regarding our long-term debt obligations. (2) Refer to Note 6 - Leases of Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K for further details regarding our operating and finance leases. (3) Consists primarily of non-cancelable commitments for network, data and cloud services, background checks, and other items in the ordinary course of business with varying expiration terms through 2024. The contractual commitment obligations in the table above are associated with agreements that are enforceable and legally binding. As of December 31, 2020, we had recorded liabilities of $95 million related to uncertain tax positions. Due to uncertainties in the timing of potential tax audits, the timing of the resolution of these positions is uncertain and we are unable to make a reasonable estimate of the timing of payments in individual years particularly beyond 12 months. As a result, this amount is not included in the table above. The table above also excludes approximately $771 million of non-interest bearing unsecured convertible notes related to the acquisition of Careem. For additional discussion on the acquisition of Careem, see Note 18 – Business Combinations to our consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Critical Accounting Policies and Estimates We believe that the following accounting policies involve a high degree of judgment and complexity and are critical to understanding and evaluating our consolidated financial condition and results of our operations. An accounting policy is considered to be critical if it requires judgment on a significant accounting estimate to be made based on assumptions about matters that are uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the reported amounts of assets, liabilities, revenue and expenses, and related disclosures in our audited consolidated financial statements. We have based our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Although we believe that the estimates we use are reasonable, due to the inherent uncertainty involved in making those estimates, actual results reported in future periods could differ from those estimates. We believe that the following critical accounting policies reflect the more significant judgments, estimates and assumptions used in the preparation of our consolidated financial statements. For additional information, see the disclosure included in Note 1 - Description of Business and Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Revenue Recognition We derive our revenue principally from service fees paid by Drivers and Merchants for the use of our platform in connection with our Mobility products and Delivery offering provided by Drivers and Merchants to end-users. Our sole performance obligation in the transaction is to connect Drivers and Merchants with end-users to facilitate the completion of a successful ridesharing trip or Delivery meal delivery. Because end-users access our platform for free, except in certain markets, and we have no performance obligation to end-users, end-users are not our customers. Further, judgment is required in evaluating the presentation of revenue on a gross versus net basis based on whether we control the service provided to the end-user and are the principal in the transaction (gross), or we arrange for other parties to provide the service to the end-user and are the agent in the transaction (net). We have concluded that we are the agent in most markets as we arrange for Drivers and Merchants to provide the service to the end user in Mobility and Delivery transactions. The assessment of 76 whether we are considered the principal or the agent in a transaction could impact the accounting for certain payments and incentives provided to Drivers and end-users and change the timing and amount of revenue recognized. In certain markets, consumers have the option to pay Drivers cash for trips, and we generally collect our service fee from Drivers for these trips by offsetting against any other amounts due to Drivers, including Driver incentives. Because we have limited means to collect our service fee for cash trips, and because we cannot control whether Drivers will generate future earnings that we can offset to collect our service fee, we have concluded collectability of such amounts is not probable until collected. As such, uncollected service fees for cash trips are not recognized in our consolidated financial statements until collected. Driver Incentives Incentives provided to customers are recorded as a reduction of revenue if we do not receive a distinct service in exchange or cannot reasonably estimate the fair value of the service received. Driver incentives that are not for a distinct service are evaluated as variable consideration, in the most likely amount to be earned by the Drivers at the time or as they are earned by the Drivers, depending on the type of Driver incentive. During the fourth quarter of 2020, we changed our accounting policy related to the presentation of cumulative payments to Drivers in excess of cumulative revenue from Drivers. Our policy for the presentation of these excess cumulative payments has changed from presenting them within cost of revenue, exclusive of depreciation and amortization, to presenting them as a reduction of revenue in our consolidated statements of operations. For additional information, see Note 1 - Description of Business and Summary of Significant Accounting Policies in the notes to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Referral incentives offered by us and earned by Drivers for performing marketing services of referring other Drivers to drive on our platform are recorded as sales and marketing expense, as we receive a distinct service. The amount recorded is the lesser of the amount of the Driver incentive paid or the established fair market value of the distinct service received. Fair market value of the distinct service is estimated using amounts paid to vendors for similar services. End-User Discounts and Promotions We offer discounts and promotions to end-users (that are not customers) to encourage use of our platform. These are offered in various forms and include: • Targeted end-user discounts and promotions : These discounts and promotions are offered to specific end-users in a market to acquire, re-engage, or generally increase end-users’ use of our platform. An example is an offer providing a discount on a limited number of rides or meal deliveries during a limited time period, and are akin to coupons. We record the cost of these discounts and promotions as sales and marketing expense at the time they are redeemed by the end-user. • End-user referrals : These referrals are earned when an existing end-user (the referring end-user) refers a new end-user (the referred end-user) to the platform and the new end-user takes his or her first ride on the platform. These referrals are typically paid in the form of a credit given to the referring end-user when earned. These referrals are offered to attract new end-users to our platform. We record the liability for these referrals and corresponding expense as sales and marketing expense at the time the referral is earned by the referring end-user. • Market-wide promotions : These promotions are pricing actions in the form of discounts that reduce the end-user fare charged by Drivers and Merchants to end-users for all or substantially all Mobility or meal deliveries in a specific market. Accordingly, we record the cost of these promotions as a reduction of revenue at the time the trip is completed. Business Combinations We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired driver, fleet, merchant, and end-user contracts, acquired technology, and trade names, based on expected future growth rates and margins, attrition rates, future changes in technology and royalty for similar brand licenses, useful lives, and discount rates. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Allocation of purchase consideration to identifiable assets and liabilities affects our amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any indefinite lived intangible assets, including goodwill, are not amortized. During the measurement period, which is not to exceed one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings. 77 Embedded Derivatives During 2015, we had issued convertible notes that contain embedded features subject to derivative accounting. These embedded features are composed of conversion options that have the economic characteristics of a contingent early redemption feature settled in shares of our stock rather than cash, because the total number of shares of our common stock delivered to settle these embedded features will have a fixed value. These conversion options are bifurcated from the underlying instrument and accounted for and valued separately from the host instrument. Embedded derivatives are recognized as derivative liabilities on our consolidated balance sheet. We measure these instruments at their estimated fair value and recognize changes in their estimated fair value in other income (expense), net in our consolidated statement of operations and comprehensive loss during the period of change. We value these embedded derivatives as the difference between the estimated value of these convertible notes with and without the Qualified Initial Public Offering (“QIPO”) conversion option (“QIPO Conversion Option”). The fair value of these convertible notes with and without the QIPO Conversion Option is estimated utilizing a discounted cash flow model to discount the expected payoffs at various potential QIPO dates to the valuation date. The key inputs to the valuation model include the probability of a QIPO occurring at various points in time and the discount yield, which was derived by imputing the fair value as equal to the face value on the issuance date of these convertible notes. The discount rate is updated during each period to reflect the yield of a comparable instrument issued as of the valuation date. Upon closing of the IPO in May 2019, holders of these convertible notes elected to convert all outstanding notes into shares of common stock. For additional information, refer to Note 11 - Stockholders' Equity included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K. Investments—Non-Marketable Equity and Debt Securities We hold investments in privately held companies in the form of equity securities and debt securities without readily determinable fair values and in which we do not have a controlling interest or significant influence. Investments in equity securities without readily determinable fair values are initially recorded at cost and are subsequently adjusted to fair value for impairments and price changes from observable transactions in the same or a similar security from the same issuer. Investments in material available-for-sale debt securities are recorded initially at fair value and subsequently remeasured to fair value at each reporting date with the changes in fair value recognized in other comprehensive income (loss), net of tax. We may elect the fair value option for financial instruments and account for investments in debt and equity securities at fair value with changes reported in net income (loss) from continuing operations. Privately held equity and debt securities are valued using significant unobservable inputs or data in inactive markets. This valuation requires judgment due to the absence of market prices and inherent lack of liquidity and are classified as Level 3 in the fair value hierarchy. In determining the estimated fair value of our investments in privately held companies, we utilize the most recent data available including observed transactions such as equity financing transactions of the investees and sales of the existing shares of the investees’ securities. In addition, the determination of whether an observed transaction is similar to the equity and debt securities held by us requires significant management judgment based on the rights and preferences of the securities. We assess our investment portfolio of privately held equity and debt securities quarterly for impairment. The impairment analysis for investments in equity securities includes a qualitative analysis of factors including the investee’s financial performance, industry and market conditions, and other relevant factors. If an equity investment is considered to be impaired we will establish a new carrying value for the investment and recognize an impairment loss through our consolidated statement of operations. Investments in debt securities are evaluated for impairment quarterly based on whether its fair value has declined below its amortized cost. In circumstances where we intend to sell, or are more likely than not required to sell the security before it recovers its amortized cost basis, the difference between the fair value and amortized cost is recognized as a loss in the consolidated financial statement of operations, with a corresponding write-down of the security’s amortized cost. In circumstances where neither condition exists, we then evaluate whether a decline is due to credit-related factors. The factors considered in determining whether a credit loss exists can include the extent to which fair value is less than the amortized cost basis, changes in the credit quality of the underlying loan obligors, credit ratings actions, as well as other factors. To determine the portion of a decline in fair value that is credit-related, we compare the present value of the expected cash flows of the security discounted at the security’s effective interest rate to the amortized cost basis of the security. A credit-related impairment is limited to the difference between fair value and amortized cost, and recognized as an allowance for credit loss on the consolidated balance sheet with a corresponding adjustment to net income (loss). Any remaining decline in fair value that is non-credit related is recognized in other comprehensive income (loss), net of tax. Improvements in expected cash flows due to improvements in credit are recognized through reversal of the credit loss and corresponding reduction in the allowance for credit loss. Equity Method Investments We account for investments in the common stock or in-substance common stock of entities in which we have the ability to exercise significant influence, but do not own a controlling financial interest, using the equity method. Investments accounted for under the equity method are initially recorded at cost. Subsequently, we recognize through our consolidated statement of operations, and as an adjustment to the investment balance, our proportionate share of the entities’ net income or loss and reflect the amortization 78 of basis differences. In accounting for these investments, we record our share of the entities’ net income or loss one quarter in arrears. Equity method investments for which the fair value option is elected are measured at fair value on a recurring basis with changes in fair value reflected in earnings. We review our equity method investments for impairment whenever events or changes in business circumstances indicate that the carrying value of the investment may not be fully recoverable. Qualitative and quantitative factors considered as indicators of a potential impairment include financial results and operating trends of the investees, implied values in transactions of the investee’s securities, severity and length of decline in value, and our intention for holding the investment, among other factors. If an impairment is determined to be other-than-temporary, the fair value of the impaired investment would have to be determined and an impairment charge recorded for the difference between the fair value and the carrying value of the investment. The fair value determination, particularly for investments in privately held companies, requires significant judgment to determine appropriate estimates and assumptions. Changes in these estimates and assumptions could affect the calculation of the fair value of the investments and the determination of the impairment charges. Loss Contingencies We are involved in legal proceedings, claims, and regulatory, non-income tax, or government inquiries and investigations that arise in the ordinary course of business. Certain of these matters include claims for substantial or indeterminate amounts of damages. We record a liability when we believe that it is both probable that a loss has been incurred and the amount can be reasonably estimated. If we determine that a loss is reasonably possible and the loss or range of loss can be reasonably estimated, we disclose the possible loss in the accompanying notes to the consolidated financial statements. We review the developments in our contingencies that could affect the amount of the provisions that have been previously recorded, and the matters and related reasonably possible losses disclosed. We make adjustments to our provisions and changes to our disclosures accordingly to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and updated information. Significant judgment is required to determine both the probability and the estimated amount of loss. These estimates have been based on our assessment of the facts and circumstances at each balance sheet date and are subject to change based on new information and future events. The outcomes of litigation and other disputes are inherently uncertain. Therefore, if one or more of these matters were resolved against us for amounts in excess of management’s expectations, our results of operations and financial condition, including in a particular reporting period in which any such outcome becomes probable and estimable, could be materially adversely affected. Income Taxes We are subject to income taxes in the United States and foreign jurisdictions. We account for income taxes using the asset and liability method. The establishment of deferred tax assets from intra-entity transfers of intangible assets requires management to make significant estimates and assumptions to determine the fair value of such intangible assets. Significant estimates in valuing intangible assets may include, but are not necessarily limited to, internal revenue and expense forecasts, the estimated life of the intangible assets, comparable transaction values, and / or discount rates. The discount rates used to discount expected future cash flows to present value are derived from a weighted-average cost of capital analysis and are adjusted to reflect the inherent risks related to the cash flow. Although we believe the assumptions and estimates we have made are reasonable and appropriate, they are based, in part, on historical experience, internal and external comparable data and are inherently uncertain. Unanticipated events and circumstances may occur that could affect either the accuracy or validity of such assumptions, estimates or actual results. We account for uncertainty in tax positions by recognizing a tax benefit from uncertain tax positions when it is more-likely-than-not that the position will be sustained upon examination. Evaluating our uncertain tax positions, determining our provision for income taxes, and evaluating the ongoing impact of the Tax Act, are inherently uncertain and require making judgments, assumptions, and estimates. While we believe we have adequately reserved for our uncertain tax positions, no assurance can be given that the final tax outcome of these matters will not be different. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes and the effective tax rate in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves as well as the related net interest and penalties. In addition, we are subject to the continuous examination of our income tax returns by the IRS and other tax authorities which may assert assessments against us. We regularly assess the likelihood of adverse outcomes resulting from these examinations and assessments to determine the adequacy of our provision for income taxes. Insurance Reserves We use a combination of third-party insurance and self-insurance mechanisms, including a wholly-owned captive insurance subsidiary, to provide for the potential liabilities for certain risks, including auto liability, uninsured and underinsured motorist, auto physical damage, general liability, and workers’ compensation. The insurance reserves is an estimate of our potential liability for unpaid losses and loss adjustment expenses, which represents the estimate of the ultimate unpaid obligation for risks retained by us and includes an amount for case reserves related to reported claims and an amount for losses incurred but not reported as of the 79 balance sheet date. The estimate of the ultimate unpaid obligation utilizes generally accepted actuarial methods applied to historical claim and loss experience. In addition, we use assumptions based on actuarial judgment related to claim and loss development patterns and expected loss costs, which consider frequency trends, severity trends, and relevant industry data. These reserves are continually reviewed and adjusted as experience develops and new information becomes known. Adjustments, if any, relating to accidents that occurred in prior years are reflected in the current year results of operations. All estimates of ultimate losses and allocated loss adjustment expenses, and of resulting reserves, are subject to inherent variability caused by the nature of the insurance claim settlement process. Such variability is increased for us due to limited historical experience and the nature of the coverage provided. Actual results depend upon the outcome of future contingent events and can be affected by many factors, such as claim settlement processes and changes in the economic, legal, and social environments. As a result, the net amounts that will ultimately be paid to settle the liability, and when these amounts will be paid, may vary in the near term from the estimated amounts. While management believes that the insurance reserve amount is adequate, the ultimate liability may be in excess of, or less than, the amount provided. Stock-Based Compensation We have granted stock-based awards consisting primarily of stock options, restricted common stock, RSUs, warrants, and SARs to employees, members of our board of directors, and non-employee advisors. The substantial majority of our stock-based awards have been made to employees. The majority of our outstanding RSUs, as well as certain options, SARs, and shares of restricted common stock, contain both a service-based vesting condition and a liquidity-event based vesting condition. The service-based vesting condition for the majority of these awards is satisfied over four years. The liquidity event-based vesting condition is satisfied upon the occurrence of a qualifying event, which is generally defined as a change in control transaction or the effective date of an initial public offering (“IPO”). Prior to our IPO in May 2019, no qualifying event had occurred, and we did not recognized any stock-based compensation expense for the RSUs and other awards with both a service-based vesting condition and a liquidity event-based vesting condition. We account for stock-based employee compensation under the fair value recognition and measurement provisions, in accordance with applicable accounting standards, which requires compensation expense for the grant-date fair value of stock-based awards to be recognized over the requisite service period. We account for forfeitures when they occur. We have elected to use the Black-Scholes option-pricing model to determine the fair value of stock options, warrants, and SARs on the grant date. The Black-Scholes option-pricing model requires certain subjective inputs and assumptions, including the fair value of our common stock, the expected term, risk-free interest rates, expected stock price volatility, and expected dividend yield of our common stock. These assumptions used in the Black-Scholes option-pricing model, other than the fair value of our common stock (see the section titled “-Common Stock Valuations” below), are estimated as follows: • Expected term . We estimate the expected term based on the simplified method for employees and on the contractual term for non-employees. • Risk-free interest rate . The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. • Expected volatility . We estimate the volatility of our common stock on the date of grant based on the weighted-average historical stock price volatility of comparable publicly-traded companies in our industry group. • Expected dividend yield . Expected dividend yield is zero percent, as we have not paid and do not anticipate paying dividends on our common stock. We continue to use judgment in evaluating the expected volatility and expected term utilized in our stock-based compensation expense calculation on a prospective basis. As we continue to accumulate additional data related to our common stock, we may refine our estimates of expected volatility and expected term, which could materially impact our future stock-based compensation expense. Recent Accounting Pronouncements See Note 1 - Description of Business and Summary of Significant Accounting Policies, to the consolidated financial statements included in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K.