Uber Technologies, Inc. — Q3 2020 Form 10-Q
Reporting period: Three and nine months ended September 30, 2020. Financial statements are unaudited; amounts are in U.S. dollars unless noted. Uber operates Mobility, Delivery, Freight, and ATG and Other Technology Programs.
Key financial and operating metrics
| Metric | Q3 2020 | Q3 2019 | Change |
|---|---|---|---|
| Revenue | $3.129 billion | $3.813 billion | Down 18% |
| Mobility revenue | $1.365 billion | $2.895 billion | Down 53% |
| Delivery revenue | $1.451 billion | $645 million | Up 125% |
| Gross Bookings | $14.745 billion | $16.465 billion | Down 10% reported; down 8% constant currency |
| Monthly Active Platform Consumers | 78 million | 103 million | Down 24%; up 42% sequentially |
| Trips | 1.150 billion | 1.770 billion | Down 35% |
| Adjusted Net Revenue | $2.813 billion | $3.533 billion | Down 20% |
| Net loss attributable to Uber | $1.089 billion | $1.162 billion | Loss narrowed 6%; diluted loss per share was $0.62 versus $0.68 |
| Adjusted EBITDA loss | $625 million | $585 million | Loss widened 7% |
| Loss from operations | $1.116 billion | $1.106 billion | Operating loss margin was approximately 36% versus 29% |
Q3 Mobility Gross Bookings fell 50% year over year on a constant-currency basis, while Delivery Gross Bookings rose 135%. Management cited larger delivery baskets and stay-at-home demand. Mobility generated $245 million of Adjusted EBITDA; Delivery recorded a $183 million Adjusted EBITDA loss. Overall Take Rate was 19.1%.
For the first nine months, revenue was $8.913 billion, down 12%; net loss attributable to Uber was $5.799 billion versus $7.410 billion; and Adjusted EBITDA loss was $2.074 billion versus $2.110 billion.
Cash, liquidity, debt, and cash flow
- At September 30, cash and cash equivalents were $6.154 billion and short-term investments were $1.132 billion, totaling $7.286 billion in unrestricted cash, equivalents, and short-term investments. Cash and restricted cash totaled $7.766 billion.
- Nine-month operating cash outflow was $1.940 billion; investing cash outflow was $2.677 billion; financing cash inflow was $483 million. Capital expenditures were $493 million.
- Balance-sheet debt was $7.194 billion, including current debt of $527 million and long-term debt, net, of $6.667 billion. The filing separately describes approximately $8.0 billion of outstanding indebtedness on a principal basis; it also reports Careem convertible-note commitments.
- The $2.3 billion revolving credit facility had no balance outstanding. Uber reported compliance with debt covenants and stated that available funding was expected to cover anticipated needs for at least the next 12 months.
- Total current assets were $9.412 billion and current liabilities were $6.921 billion. Insurance reserves totaled $3.402 billion, including current and long-term portions.
Material changes and unusual items
- COVID-19 sharply reduced Mobility activity, while delivery growth partly offset the decline. Cost of revenue fell year over year, but rose to 52% of revenue from 49%; operating expenses also remained substantial.
- First-quarter investment impairments, principally Didi, drove $1.7 billion of nine-month impairment charges on debt and equity securities. A $160 million Q3 reversal related to the earlier Grab credit-loss allowance partially offset those charges. Management described total first-quarter pre-tax impairment charges of approximately $2.1 billion, principally related to Didi and Grab.
- Uber recorded $376 million of restructuring and related charges in the first nine months, primarily tied to pandemic-related cost reductions and the JUMP exit. Management targeted at least $1.0 billion in annual savings versus its original planned Q4 2020 cost structure, but cautioned that savings were not assured.
- Q3 included $80 million of accelerated lease expense and $76 million of asset impairments associated with exiting certain offices. Nine-month results also included a $154 million gain on the sale of Uber Eats India and a $27 million loss on the JUMP divestiture.
- Acquisitions included Careem, Cornershop Global, and Routematch. The Careem acquisition added $2.484 billion of goodwill; Cornershop Global added $370 million. The proposed Postmates acquisition remained pending and was expected to close in Q1 2021, subject to approvals and other conditions.
Outlook, risks, and contingencies
- The filing provides no specific quarterly revenue or earnings guidance. Management said COVID-19’s duration and ultimate impact on demand, liquidity, results, and cash flows could not be reliably predicted; Q3 results may not indicate future periods.
- Management expected Proposition 22, based on unofficial California results, to preserve independent-contractor status for drivers in California while requiring guaranteed earnings, injury-protection insurance, and healthcare subsidies. Uber expected related expenses but said it did not expect a material financial impact. Classification challenges continued in other jurisdictions, including Massachusetts, the UK, and Switzerland.
- Legal, regulatory, and non-income tax liabilities deemed probable and reasonably estimable were $1.7 billion at September 30, up from $1.5 billion at year-end. The filing identifies driver classification, tax, regulatory, privacy, competition, and other litigation risks; outcomes and possible losses in several matters could not be estimated.
- Other key risks include prolonged weakness in Mobility, intense competition and incentive spending, driver supply and classification changes, regulatory restrictions, insurance exposure, foreign-exchange and investment-value volatility, and the company’s continuing operating losses and cash use.
- Subsequent events included the October redemption of $500 million of 2023 notes using proceeds from the 2028 notes and cash; a $500 million investment agreement for Uber Freight, with $250 million funded in October; and an October agreement for a South Korea mobility joint venture requiring an expected Uber investment of approximately $100 million.
Important facts for investors to verify
- Whether Mobility demand and Gross Bookings continue recovering, and whether Delivery growth can offset Mobility weakness.
- How Adjusted EBITDA and cash burn trend, including the realized timing and amount of the targeted restructuring savings.
- The composition and repayment terms of reported debt, including Careem convertible-note obligations and the effect of the 2023-note redemption.
- Developments in driver-classification laws and litigation, implementation costs under Proposition 22, and changes to Uber’s operating model or financial-statement presentation.
- Future valuation and impairment risk in private-company investments, particularly Didi and Grab, and the resolution of material legal and tax contingencies.