What is the main change Uber announced regarding its accounting policy?

Uber is changing how it presents 'excess driver incentives'. Previously, these were included in 'cost of revenue, exclusive of depreciation and amortization'. Now, they will be shown as a reduction of 'GAAP revenue'.

When does this accounting policy change take effect?

The change is effective for Uber's financial reporting beginning with the quarter and full year ended December 31, 2020.

What is the impact of this change on Uber's reported revenue?

By presenting excess driver incentives as a reduction of revenue, Uber's reported 'GAAP revenue' will likely appear lower than under the previous accounting method. Conversely, 'cost of revenue' will likely appear higher, as these incentives will no longer be subtracted from it. The overall impact on Net Income before these specific adjustments should be neutral, but it changes how the top-line revenue and related costs are viewed.

Will investors still be able to compare Uber's financial results over time?

Yes, Uber is providing unaudited supplemental financial information that retrospectively adjusts prior periods (2018, 2019, and the first three quarters of 2020) to reflect this new accounting policy, ensuring comparability with the new presentation.

What is 'Adjusted Net Revenue' and why is it being discontinued?

Adjusted Net Revenue was a non-GAAP measure that Uber used, primarily by excluding excess driver incentives from GAAP revenue. Since these incentives will now be presented as a reduction of GAAP revenue, this specific non-GAAP adjustment is no longer necessary, and Uber is discontinuing the measure.

UBER 8-K SEC Disclosure

Summary

Uber Technologies, Inc. (UBER) filed an 8-K on January 14, 2021, to announce a significant change in its accounting policy for presenting excess driver incentives. Previously recognized within GAAP cost of revenue, these incentives will now be presented as a reduction of GAAP revenue, effective from the fourth quarter and full year ended December 31, 2020. Management believes this change better reflects the financial performance across its businesses and enhances clarity regarding revenue and cost of revenue. Consequently, Uber will discontinue the non-GAAP financial measure known as Adjusted Net Revenue, which was primarily adjusted for these driver incentives. The company is providing retrospectively adjusted historical financial information to allow for comparable reporting, starting with periods back to 2018.

Key Highlights

1Change in accounting policy for excess driver incentives: Presented as a reduction of GAAP revenue, effective Q4 2020.
2Previous presentation of excess driver incentives was within GAAP cost of revenue, exclusive of depreciation and amortization.
3The new policy is considered preferable as it better reflects financial performance and provides more clarity.
4Discontinuation of the non-GAAP financial measure 'Adjusted Net Revenue'.
5Retrospective adjustment of historical financial information (2018, 2019, and interim 2020 periods) for comparability.
6The change aims to improve the presentation of financial performance across all of Uber's businesses.

Uber Technologies, Inc 8-K Report, Corporate Update (Jan 14, 2021)

Summary

Key Highlights

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