Uber Technologies, Inc. — Q2 2020 Form 10-Q
Reporting period: Three and six months ended June 30, 2020; unaudited. Amounts are in U.S. dollars. Uber operates Mobility, Delivery, Freight, and technology businesses. The quarter was heavily affected by COVID-19 and related travel restrictions.
Financial and operating performance
| Metric | Q2 2020 | Q2 2019 | Change |
|---|---|---|---|
| Revenue | $2.241 billion | $3.166 billion | -29% |
| Operating loss | $1.607 billion | $5.485 billion | Improved |
| Net loss attributable to Uber | $1.775 billion | $5.236 billion | Improved |
| Adjusted Net Revenue (non-GAAP) | $1.918 billion | $2.873 billion | -33% |
| Adjusted EBITDA loss (non-GAAP) | $837 million | $656 million | Loss widened |
| Operating cash flow | Six months: cash used of $1.534 billion, versus $1.644 billion in 2019 |
- Demand and mix: Q2 MAPCs were 55 million (-44%) and Trips were 737 million (-56%). Gross Bookings were $10.224 billion (-35% reported; -32% constant currency). Mobility Gross Bookings fell 73% constant currency, while Delivery Gross Bookings grew 113%.
- Segments: Mobility Adjusted EBITDA was positive $50 million, down from $506 million. Delivery’s Adjusted EBITDA loss narrowed to $232 million from $286 million. Freight’s loss was $49 million, versus $52 million. Overall Take Rate was 18.8%, up 0.6 percentage points year over year.
- Six-month results: Revenue was $5.784 billion (-8%); net loss attributable to Uber was $4.711 billion versus $6.248 billion; Adjusted EBITDA loss was $1.449 billion versus $1.525 billion.
Financial position and liquidity
- At June 30, cash and cash equivalents were $6.754 billion and short-term investments were $1.033 billion. Management cited $7.8 billion of unrestricted cash, cash equivalents, and short-term investments at quarter-end.
- Current assets were $9.662 billion and current liabilities were $5.891 billion. Total liabilities were $17.719 billion.
- Long-term debt, net of current portion, was $6.691 billion; total debt principal was $6.777 billion. Management separately reported $7.5 billion of aggregate indebtedness including $768 million of Careem convertible notes to be issued.
- A $2.3 billion revolving credit facility had no balance outstanding; $213 million of letters of credit reduced availability. Uber reported compliance with debt covenants and believed its funding sources and available credit would cover anticipated needs for at least 12 months.
- Six-month investing cash use was $2.312 billion, including $1.346 billion for business acquisitions, $362 million for property and equipment, and $1.012 billion of marketable-security purchases. Financing cash flow was positive $55 million, including $992 million of net senior-note proceeds and $891 million of Careem Note repayment.
Material changes and unusual items
- COVID-19 reduced Mobility demand; management noted year-over-year Mobility Gross Bookings improved each month during Q2. Delivery benefited from increased orders and a 34% increase in global basket sizes associated with stay-at-home orders.
- Q2 net loss included $382 million of restructuring and related charges, $48 million for COVID-19 response initiatives, and $80 million of other items management said were not indicative of ongoing performance. Restructuring included workforce reductions of approximately 6,700 roles. Uber targeted at least $1.0 billion in annualized savings versus its original Q4 2020 planned cost structure, but cautioned savings were not assured.
- First-half other expense included $1.850 billion of debt and equity securities impairments, primarily related to Didi and Grab. Uber also recorded a $100 million goodwill impairment and other asset impairments. The impairment activity contributed to a $1.839 billion first-half net other expense.
- Uber completed the $3.0 billion Careem acquisition in January; acquired operations contributed $152 million of pretax losses through June, while revenue was not material. It divested Uber Eats India for Zomato shares and a note, recording a $154 million gain, and transferred its JUMP business to Lime; the JUMP disposal loss was not material.
Outlook, risks, and contingencies
- The filing provides no formal numerical revenue or earnings guidance. Management said the pandemic’s duration and ultimate effects were highly uncertain, and Q2 results might not indicate later-quarter or full-year performance. It expected near-term losses to continue and operating expenses to rise as business recovers, while emphasizing liquidity preservation.
- Key risks include prolonged weakness in Mobility, changing consumer behavior, competition and incentive spending, and the possibility that Delivery growth will not offset Mobility declines. Management also cited uncertainty over whether Mobility demand will return to pre-pandemic levels.
- Driver classification remains a major legal and operating risk, including California AB5 litigation and a Massachusetts Attorney General lawsuit. Uber recorded $1.6 billion of accrued liabilities for probable and reasonably estimable legal, regulatory, and non-income-tax matters. It said some potential losses, including the California and Massachusetts claims, could not be estimated; Swiss reclassification matters could result in losses up to $125 million.
- Uber agreed to pay approximately $60 million in Taiwan fines, with installments through September 2021 and possible reduction depending on court outcomes. Other risks include insurance reserves, regulatory and licensing restrictions, privacy and cybersecurity, foreign exchange, and valuation uncertainty in illiquid investments.
- Subsequent events include the proposed $2.65 billion stock acquisition of Postmates, expected to close in Q1 2021 subject to approvals; completion of a controlling Cornershop investment outside Mexico; and acquisition of Routematch for approximately $115 million in cash and stock.
Important facts for investors to verify
- Whether Mobility demand continued recovering after Q2 and whether Delivery growth and improved segment economics were sustained.
- Cash burn, unrestricted liquidity, debt obligations, and actual availability of the revolving facility after letters of credit.
- Whether the targeted restructuring savings were achieved and what additional costs or workforce actions followed.
- Developments in driver-classification litigation, related liabilities, and any required changes to Uber’s operating model.
- Subsequent valuation changes or further impairments in Didi, Grab, and other investments, and final outcomes of pending acquisitions and regulatory approvals.