Breakingviews: Former Uber rival flags down SPAC business model

A former Uber Technologies rival is flagging down a new business model. Gett once aimed to challenge the $84 billion giant in the ride-hailing market. Now the British-Israeli company, which said on Wednesday it’s going public via a merger with a U.S. special-purpose acquisition company, is betting companies will control taxi spending in the same way that they monitor airline and hotel expenses.

Founded in 2010 by Dave Waiser, Gett has had a bumpy ride. Back in 2016 it was valued at $1.4 billion in a funding round backed by investors including car giant Volkswagen. Now it aims to combine ride-hailing and taxi and limousine booking into a single platform for employees of companies like Apple and Coca-Cola.

Gett reckons companies spent over $50 billion a year globally on these services before the pandemic. As business travel returns, finance managers are keen to keep a grip on expenses. Gett estimates a typical company with 2,500 people using taxis spends $5.4 million a year on ground transportation. It can save up to half that sum by directing users to the cheapest ride, checking that trips comply with corporate policies, and processing expenses. In return, the company typically pockets a 15% markup on the fee charged by the likes of Uber.

Like most companies going public via a SPAC merger, Gett is making some bullish projections. It reckons sales will reach $337 million by 2022, up from $165 million last year. The deal gives it an enterprise value of $1 billion, after deducting $248 million already raised by the SPAC and some additional investment from existing shareholders. The multiple of around 3 times next year’s sales is lower than ride-hailing rivals Uber and Lyft. Meanwhile Coupa Software, a $16 billion company which helps companies manage spending, trades at 20 times expected sales for the year to January 2023, according to Refinitiv.

Investors planning to hop on board will have to overcome some uncertainties. It’s unclear how much energy companies will devote to monitoring their employees’ taxi rides. Ride-hailing bills are among the most common expenses claims, according to Certify, but account for a tiny proportion of overall travel spending. Gett’s own projections suggest it won’t generate positive EBITDA until 2023. And ride-hailing firms could offer their own tailored services for businesses. At least Gett’s valuation leaves room for some delays.