Uber Technologies, Inc. — Q3 2023 Form 10-Q
Reporting period: Three and nine months ended September 30, 2023; filed November 7, 2023. All financial amounts are U.S. dollars. Uber operates Mobility, Delivery, and Freight platforms.
Financial and operating performance
| Metric | Q3 2023 | Q3 2022 | Change |
|---|---|---|---|
| Revenue | $9.29 billion | $8.34 billion | Up 11% (10% constant currency) |
| Operating income (loss) | $394 million | $(495) million | Operating margin 4.2% vs. (5.9%) |
| Net income (loss) attributable to Uber | $221 million | $(1.21) billion | Diluted EPS $0.10 vs. $(0.61) |
| Adjusted EBITDA | $1.09 billion | $516 million | Up 112%; 11.7% of revenue vs. 6.2% |
| MAPCs / Trips | 142 million / 2.44 billion | 124 million / 1.95 billion | Up 15% / 25% |
| Gross Bookings | $35.28 billion | $29.12 billion | Up 21% (20% constant currency) |
Revenue by segment was Mobility $5.07 billion (up 33%), Delivery $2.94 billion (up 6%), and Freight $1.29 billion (down 27%). Segment Adjusted EBITDA was $1.29 billion for Mobility, $413 million for Delivery, and a $13 million loss for Freight. Freight weakness reflected lower revenue per load and volume in a challenging market.
For the first nine months, revenue was $27.35 billion, up 18%; operating income was $458 million versus a $1.69 billion loss; and net income attributable to Uber was $458 million versus a $9.74 billion loss. Adjusted EBITDA rose to $2.77 billion from $1.05 billion. Net income comparisons were materially affected by investment fair-value movements: 2022 included $7.80 billion of net unrealized losses on debt and equity securities, while 2023 included $610 million of net unrealized gains.
Cash flow, liquidity, and debt
- Nine-month operating cash flow was $2.76 billion and free cash flow was $2.59 billion, compared with $886 million and $693 million, respectively, in 2022. Both 2023 measures included a $622 million UK VAT-assessment payment.
- At September 30, cash and cash equivalents were $4.45 billion and short-term investments were $725 million; together, $5.17 billion of unrestricted cash and short-term investments. Total cash and restricted cash was $6.87 billion.
- Total debt principal was $9.34 billion; balance-sheet long-term debt, net of discounts and current portion, was $9.25 billion. The revolving credit facility had approximately $2.5 billion of capacity and no balance outstanding. Uber reported covenant compliance.
- Nine-month investing cash outflow was $2.41 billion, including $5.93 billion of marketable-security purchases, partly offset by $2.99 billion of maturities and sales and $721 million from selling its remaining MLU B.V. interest.
Material changes, outlook, and notable items
- Mobility and Delivery growth and improved segment profitability drove higher consolidated operating income and Adjusted EBITDA. Mobility Gross Bookings grew 30% and Delivery Gross Bookings 16% year over year on a constant-currency basis; Freight Gross Bookings fell 27%.
- Business-model changes in certain countries made end-users customers and shifted some promotions from sales and marketing expense to contra-revenue. This reduced Q3 revenue by $161 million in Mobility and $360 million in Delivery, affecting comparisons between revenue and expenses.
- Insurance costs increased with Mobility miles driven. Sales and marketing and general and administrative expenses decreased year over year; research and development expense and stock-based compensation remained substantial. Q3 stock-based compensation was $492 million.
- Uber said its available funding and credit line should cover anticipated cash needs for at least the next 12 months. This is management’s liquidity assessment, not quantified earnings guidance; the filing provides no specific forward revenue or profit guidance.
- Uber paid approximately $622 million toward disputed UK VAT assessments to pursue appeals; it recorded the payments as a receivable and expects possible additional assessments requiring payment before appeal. Management said the payments reduce operating cash flow but do not affect results of operations.
- The Careem non-ridesharing transaction with e&, under which Uber would retain about 42% ownership, was subject to approvals and expected to close in Q4 2023. The ridesharing business was to remain wholly owned. Uber had already sold its remaining 29% MLU B.V. interest for $703 million.
- Material risks include driver-classification litigation and regulation, insurance and legal exposures, competition and incentive needs, investment-value volatility, and Freight-market weakness. The California Supreme Court agreed to review a Proposition 22 challenge, with a decision expected in 2024; Massachusetts driver-classification trial was set for summer 2024. In November 2023, Uber disclosed an agreement to resolve New York matters, with the accrual included in the September 30 balance sheet.
- Aggregate recorded liabilities for legal, regulatory, and non-income-tax matters were approximately $1.6 billion at September 30. The filing cautions that outcomes could exceed estimates and materially affect results, financial condition, or cash flows.
Most important facts for investors to verify
- Whether Mobility and Delivery growth and Adjusted EBITDA gains persist, particularly after excluding non-GAAP adjustments and accounting changes that moved promotions to contra-revenue.
- Actual cash conversion and liquidity needs, including restricted cash, insurance collateral requirements, and further UK VAT payments or recovery of amounts paid.
- Progress and outcomes in driver-classification cases, Proposition 22 review, employment-tax matters, and other legal and regulatory contingencies.
- Freight demand and profitability, as well as the valuation and potential liquidity of Uber’s minority investments.
- Careem transaction completion and terms, and any dilution or cash obligations related to debt, convertible notes, and equity compensation.