FROM PUBLISHED ACCOUNTS

REVENUE RECOGNITION POLICY FOR A
COMPANY ENGAGED IN THE BUSINESS OF ‘RIDE SHARING’

UBER TECHNOLOGIES, INC.
(31^ST DECEMBER, 2018)

(From Summary of Key Accounting Policies)

 Revenue Recognition

The Company recognises
revenue when or as it satisfies its obligation. The Company derives its
revenues principally from Partners’ use of its ‘Core Platform’ and related
services in connection with ride sharing and Uber Eats and from customers’ use
of Other Bets offerings, including Freight and New Mobility.

Core Platform

The Company enters into
Master Services Agreements (“MSA”) with Partners to use the Platform.
The MSA defines the service fee that the company charges the Partners for each
transaction. Upon acceptance of a transaction, the Partner agrees to perform
the ride sharing or Eats services as requested by an end-user. The acceptance
of a transaction request combined with the MSA establishes enforceable rights
and obligations for each transaction. A contract exists between the Company and
a Partner after the Partner accepts a transaction request and the Partner’s
ability to cancel the transaction lapses. End-users access the Platform for
free and the Company has no performance obligation to end-users. As a result,
end-users are not the Company’s customers.

The Company’s Platform and
related service includes on-demand lead generation and related activities,
including facilitating payments from end-users, that enable Partners to seek,
receive and fulfil on-demand requests from end-users seeking ride sharing
services and Eats services. These activities are performed to satisfy the
Company’s sole performance obligation in the transaction, which is to connect
its Partners with end-users to facilitate the completion of a successful
transaction.

Judgement is required in
determining whether the Company is the principal or agent in transactions with
Partners and end-users. The Company evaluates the presentation of revenue on a
gross or net basis based on whether it controls the service provided to the
end-user and is the principal (i.e., “gross”), or the Company
arranges for other parties to provide the service to the end-user and is an
agent (i.e. “net”). For ride sharing and Eats transactions, the
Company’s role is to provide the service to Partners to facilitate a successful
trip or Eats service to end-users. The Company concluded that it does not
control the goods or services provided by Partners to end-users as (i) it does
not pre-purchase or otherwise obtain control of the Partners’ goods or services
prior to its transfer to the end-user; (ii) the Company does not direct
Partners to perform the service on the Company’s behalf, and Partners have the
sole ability to decline a transaction request; and (iii) the Company does not
integrate services provided by Partners with its other services and then
provide them to end-users.

As part of the Company’s
evaluation of control, the Company reviews other specific indicators to assist
in the principal versus agent conclusions. The Company is not primarily
responsible for ride sharing and Eats services provided to end-users, nor does
it have inventory risk related to these services. While the Company facilitates
setting the price for ride sharing and Eats services, the Partner and end-users
have the ultimate discretion in accepting the transaction price and this
indicator alone does not result in the Company controlling the services
provided to end-users.

Partners are the Company’s
customers and pay the Company a service fee for each successfully completed
transaction with end-users. The Company’s obligation in the transaction is
satisfied upon completion by the Partner of a transaction. In the vast majority
of transactions with end-users, the Company acts as an agent by connecting
end-users seeking ride sharing and Eats services with Partners looking to
provide these services. Accordingly, the Company recognises revenue on a net
basis, representing the fee that the Company expects to receive in exchange for
providing the service to Partners. The Company records refunds to end-users
that it recovers from Partners as a reduction to revenue. Refunds to end-users
due to end-user dissatisfaction with the Platform are recorded as marketing
expenses and reduce the accounts receivable amount associated with the
corresponding transaction.

Ride sharing

The Company derives its
ride sharing revenue primarily from service fees paid by Partners for use of
the Platform and related service to connect with riders and successfully
complete a trip via the Platform. The Company recognises revenue when a trip is
complete. There were no unsatisfied performance obligations as of 31^st
December, 2018.

Depending on the market
where the trip is completed, the service fee is either a fixed percentage of
the end-user fare or the difference between the amount paid by an end-user and
the amount earned by a Partner. In markets where the Company earns the difference
between the amount paid by an end-user and the amount earned by a Partner,
end-users are quoted a fixed upfront price for ride sharing services while the
Company pays Partners based on actual time and distance for the ride sharing
services provided. Therefore, the Company can earn a variable amount and may
realise a loss on the transaction. The Company typically receives the service
fee within a short period of time following the completion of a trip and, as
such, Partner contracts do not have a significant financing component.

In addition, end-users in
certain markets have the option to pay cash for trips. On such trips, cash is
paid by end-users to Partners. The Company generally collects its service fee
from Partners for these trips by offsetting against any other amounts due to
Partners, including Partner incentives. As the Company currently has limited
means to collect its service fee for cash trips and cannot control whether
Partners will generate future amounts owed to them for offset, it concluded
collectability of such amounts is not probable until collected. As such,
uncollected service fees for cash trips are not recognised in the consolidated
financial statements until collected from Partners.

Uber Eats

The Company derives its
Uber Eats revenue primarily from service fees paid by Partners for use of the
Platform and related service to successfully complete a meal delivery service
via the Platform. The Company recognises revenue when an Uber Eats transaction
is complete. There were no material unsatisfied performance obligations as of
31^st December, 2018.

The service fee paid by
Restaurant Partners is a fixed percentage of the meal price. The service fee
paid by Delivery Partners is the difference between the delivery fee amount
paid by the end-user and the amount earned by the Delivery Partner. End-users
are quoted a fixed price for the meal delivery while the Company pays Partners
based on actual time and distance for the delivery. Therefore, the Company
earns a variable amount on a transaction and may realise a loss on the
transaction. The Company typically receives the service fee within a short
period of time following the completion of a delivery. As such, Restaurant and
Delivery Partner contracts do not have a significant financing component.

OTHER BETS

Uber Freight

The Company derives its
Uber Freight revenue from freight transportation services provided to Shippers.
Revenue for Uber Freight represents the gross amount of fees charged to
Shippers for these services. Costs incurred with carriers for Uber Freight
transportation are recorded in cost of revenue.

Shippers contract with the
Company to utilise the Company’s network of independent freight carriers to
transport freight. The Company enters into contracts with Shippers that define
the price for each shipment and payment terms. The Company’s acceptance of the
shipment request establishes enforceable rights and obligations for each
contract. By accepting the Shipper’s order, the Company has responsibility for
transportation of the shipment from origin to destination. The Company enters
into separate contracts with independent freight carriers and is responsible
for prompt payment of freight charges to the carrier regardless of payment by
the Shipper. The Company’s sole performance obligation is the transport of
Shipper freight using its network of independent freight carriers. The Company
invoices the Shipper upon satisfaction of the performance obligation.

Judgement is required in
determining whether the Company is the principal or agent in transactions with
Shippers. For each contract entered into with a Shipper, the Company is
responsible for identifying and directing independent freight carriers to
transport the Shipper’s goods. The Company therefore controls the service
before it is transferred to the Shipper. The Company is primarily responsible
for fulfilling the contract with the Shipper, including having discretion in
selecting a qualified independent freight carrier that meets the Shipper’s
specifications. The Company also has pricing discretion and negotiates
separately the price(s) charged to Shippers and amounts paid to carriers.
Accordingly, the Company is the principal in these transactions.

In consideration for the
Company’s Freight services, Shippers pay the Company a fixed amount for each
completed shipment. When the Shipper’s freight reaches its intended
destination, the Company’s performance obligation is complete. The Company
recognises revenue associated with the Company’s performance obligation over
the contract term, which represents its performance over the period of time a
shipment is in transit. While the transit period of the Company’s contracts can
vary based on origin and destination, contracts still in transit at period end
are not material. Payment for the Company’s services is generally due within 30
to 45 days upon delivery of the shipment. As such, the Company does not have
significant financing components in contracts with Shippers.

New Mobility

The Company’s New Mobility
products, including dockless e-bikes, represent its new or emerging offerings
beyond its Core Platform. New Mobility revenues were not material in 2018.

Incentives to Partners

Incentives provided to
Partners are recorded as a reduction of revenue if the Company does not receive
a distinct good or service or cannot reasonably estimate fair value of the good
or service received. Incentives to Partners that are not for a distinct good or
service are evaluated as variable consideration, in the most likely amount to
be earned by the Partner, at the time or as they are earned by the Partner,
depending on the type of incentive. Since incentives are earned over a short
period of time, there is limited uncertainty when estimating variable
consideration.

Incentives earned by Partners for referring new Partners are
paid in exchange for a distinct service and are accounted for as customer
acquisition costs. The Company expenses such referral payments as incurred in
sales and marketing expenses in the consolidated statements of operations. The
Company applied the practical expedient under ASC 340-40-25-4 and expenses
costs to acquire new customer contracts as incurred because the amortisation
period would be one year or less. The amount recorded as an expense is the
lesser of the amount of the incentive paid or the established fair value of the
service received. Fair value of the service is established using amounts paid
to vendors for similar services. The amounts paid to Partners presented as
sales and marketing expenses for the years ended 31^st December,
2016, 2017 and 2018 were $167 million, $199 million, and $136 million,
respectively.

The Company evaluates
whether the cumulative amount of payments, including incentives, to Partners
that are not in exchange for a distinct good or service received from Partners
exceeds the cumulative revenue earned since inception of the Partner
relationships. Any cumulative payments in excess of cumulative revenue are
presented as cost of revenue in the consolidated statements of operations. The
amounts presented as cost of revenue for the years ended 31^st December,
2016, 2017 and 2018 were $507 million, $530 million and $837 million,
respectively.

End-User Discounts and Promotions

The Company offers
discounts and promotions to end-users to encourage use of the Company’s
Platform. These are offered in various forms of discounts and promotions and
include:

Targeted end-user
discounts and promotions: These
discounts and promotions are offered to a limited number of end-users in a
market to acquire, re-engage, or generally increase end-users use of the
platform, and are akin to coupon(s). An example is an offer providing a
discount on a limited number of rides or meal deliveries during a limited time
period. The Company records the cost of these discounts and promotions as sales
and marketing expenses 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 / her first ride on the
Platform. These referrals are typically paid in the form of a credit given to
the referring end-user. These referrals are offered to attract new end-users to
the Platform. The Company records the liability for these referrals and
corresponding expense as sales and marketing expenses 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
Partners to end-users for all or substantially all rides or meal deliveries in
a specific market. Accordingly, the Company records the cost of these promotions
as a reduction of revenue at the time the trip is completed.

Vehicle Solutions Revenues

The Company leases vehicles
to third parties who could potentially use them to provide Core Platform
services. These arrangements are classified as operating leases as defined
within ASC 840, “Leases” (“ASC 840”). The Company
recognises revenue from these arrangements as lease payments are collected.

Other

The Company has elected to
exclude from revenue taxes assessed by a governmental authority that are both
imposed on and are concurrent with specific revenue producing transactions, and
collected from Partners and remitted to governmental authorities. Accordingly,
such amounts are not included as a component of revenue or cost of revenue.

Practical Expedients