Uber Technologies, Inc. — Q2 2023 Form 10-Q
Reporting period: Three and six months ended June 30, 2023; unaudited. Uber operates Mobility, Delivery and Freight platforms. Comparisons below are year over year unless noted.
Financial and operating performance
| Metric | Q2 2023 | Prior comparable period | Change |
|---|---|---|---|
| Revenue | $9.23 billion | $8.07 billion | +14% reported; +17% constant currency |
| Operating income (loss) | $326 million | $(713) million | Turned profitable |
| Net income (loss) attributable to Uber | $394 million | $(2.60) billion | Turned profitable |
| Diluted earnings (loss) per share | $0.18 | $(1.33) | Turned positive |
| Adjusted EBITDA | $916 million | $364 million | +152% |
| MAPCs | 137 million | 122 million | +12% |
| Trips | 2.282 billion | 1.872 billion | +22% |
| Gross Bookings | $33.60 billion | $29.08 billion | +16% reported; +18% constant currency |
Operating margin was approximately 3.5% in Q2 2023, compared with an operating loss margin of approximately 8.8% a year earlier. Net income included a $386 million pre-tax net unrealized gain on debt and equity securities and $504 million of stock-based compensation expense; investment revaluations can make reported earnings volatile.
By segment, Q2 revenue was Mobility $4.89 billion (+38%), Delivery $3.06 billion (+14%) and Freight $1.28 billion (−30%). Segment Adjusted EBITDA was $1.17 billion for Mobility, $329 million for Delivery and $(14) million for Freight. Freight weakness reflected macroeconomic pressure on freight brokerage.
- Six-month results: Revenue was $18.05 billion (+21%); operating income was $64 million versus a $1.20 billion loss; net income attributable to Uber was $237 million versus a $8.53 billion loss. Adjusted EBITDA was $1.68 billion versus $532 million.
- Cash flow, six months: Operating cash flow was $1.80 billion, versus $454 million. Free cash flow, a non-GAAP measure defined as operating cash flow less property and equipment purchases, was $1.69 billion versus $335 million. Q2-only cash flow and free cash flow are not separately provided in the presented filing data.
- Liquidity at June 30: Cash and cash equivalents were $5.00 billion and short-term investments $538 million; management reported $5.5 billion of unrestricted cash, cash equivalents and short-term investments. Current assets were $10.66 billion and current liabilities $8.64 billion.
- Debt: Long-term debt, net, was $9.26 billion; total debt principal was $9.35 billion. Uber refinanced term loans into $2.50 billion of loans due in 2030 at SOFR plus 2.75%. No balance was drawn on the approximately $2.2 billion revolving facility at quarter-end; capacity rose to approximately $2.5 billion after a July 28 amendment.
Changes and notable items
- Growth was led by Mobility trip volumes. Mobility revenue also benefited from UK business-model changes; Uber said these changes increased Mobility revenue by $280 million in Q2 and $1.2 billion in the first half. Revenue comparisons therefore reflect presentation and business-model effects as well as activity growth.
- Delivery revenue increased, while a change in certain markets shifted some customer promotions from sales and marketing expense to contra-revenue and some payments and incentives to cost of revenue.
- Cost of revenue rose 7% in Q2, including higher insurance expense associated with more Mobility miles and higher Courier and Driver payments; Freight Carrier payments declined with Freight activity. General and administrative expense fell 42%, mainly due to lower legal settlements and other corporate expenses.
- Uber sold its remaining 29% interest in MLU B.V. in April for $703 million cash, with an immaterial loss. A $400 million investment by e& in the Careem Super App, in exchange for a majority interest, was pending regulatory approval and other customary conditions and was expected to close in the second half of 2023; Uber expected to retain approximately 42% and continue to own Careem’s ridesharing business.
Outlook, risks and contingencies
The filing provides no specific revenue, earnings or Adjusted EBITDA guidance. Management said existing cash, funding sources and available credit were expected to meet anticipated cash requirements for at least the next 12 months. Management also noted a reasonable possibility of releasing a significant portion of the U.S. deferred-tax valuation allowance within 18 months, but the timing and amount are unknown.
- UK VAT dispute: HMRC assessed £386 million (approximately $487 million) for VAT covering March 2022 to March 2023. Uber paid in July 2023 to pursue an appeal, stated it did not accept the assessment, and expected to record the payment as a receivable. Further assessments and cash outflows are possible.
- Driver classification and litigation: Uber reported $1.5 billion of recorded aggregate liabilities for legal, regulatory and non-income-tax matters at June 30. It faces classification claims and proceedings in multiple jurisdictions; certain possible losses cannot be estimated. California’s Proposition 22 remained in effect after an appellate ruling, with California Supreme Court review granted and a decision expected in 2024.
- Insurance and liquidity: Insurance reserves increased to $5.66 billion from $4.72 billion at year-end. Reserve estimates, collateral needs and claims experience may affect cash requirements and results.
- Other principal risks: Competition and incentives, macroeconomic conditions, volatile minority-investment values, regulatory restrictions and licensing, cybersecurity and privacy, safety, and the possibility of employee classification. Uber reported compliance with debt covenants at June 30.
Most important facts for investors to verify
- How much of revenue and profit growth reflects underlying trip and order activity versus UK and other business-model or accounting presentation changes.
- Adjusted EBITDA and free cash flow reconciliations, including excluded stock compensation, legal items and other adjustments; stock-based compensation was $504 million in Q2.
- The cash-flow and balance-sheet effects of the UK VAT appeal, any further assessments, and the ultimate recoverability and timing of the payment.
- Changes in insurance reserves, claims and collateral requirements, and whether operating cash generation remains strong without relying on working-capital movements.
- Developments in driver-classification cases, tax disputes and other contingencies, including whether recorded reserves remain adequate.
- Debt service exposure, particularly floating-rate 2030 term loans, and the performance and valuation of equity investments that materially affect GAAP earnings.