Uber Technologies, Inc. — Q2 2021 Form 10-Q
Reporting period: Three and six months ended June 30, 2021. Unaudited results; comparisons are with the corresponding 2020 periods unless otherwise noted. Uber operates Mobility, Delivery and Freight platforms.
Key financial and operating metrics
| Metric | Q2 2021 | Q2 2020 |
|---|---|---|
| Revenue | $3.929 billion | $1.913 billion |
| Operating loss | $1.188 billion | $1.607 billion |
| Net income (loss) attributable to Uber | $1.144 billion | $(1.775) billion |
| Diluted EPS | $0.58 | $(1.02) |
| Adjusted EBITDA loss | $509 million | $837 million |
| Gross Bookings | $21.9 billion | $10.224 billion |
| MAPCs / Trips | 101 million / 1.511 billion | 55 million / 737 million |
Q2 revenue increased 105%; Gross Bookings grew 104% on a constant-currency basis. Take Rate was 17.9%. Revenue by segment was Mobility $1.618 billion, Delivery $1.963 billion and Freight $348 million. Mobility Adjusted EBITDA was positive $179 million; Delivery and Freight recorded losses of $161 million and $41 million, respectively.
Operating loss was 30% of revenue, compared with 84% in Q2 2020. Cost of revenue was 53% of revenue versus 48%; sales and marketing was 32% versus 38%. These ratios reflect a markedly higher revenue base and changes in business mix.
Six-month results: Revenue was $6.832 billion, up 32%; operating loss was $2.712 billion versus $2.870 billion; net income attributable to Uber was $1.036 billion versus a $4.711 billion loss. Adjusted EBITDA loss narrowed to $868 million from $1.449 billion.
Cash flow and liquidity: For the six months, operating cash use was $952 million versus $1.534 billion; investing cash use was $149 million versus $2.312 billion; financing cash use was $190 million versus $55 million of cash provided. At June 30, cash and cash equivalents were $4.443 billion, short-term investments $560 million, and restricted cash $2.011 billion. Management reported $5.0 billion of unrestricted cash, cash equivalents and short-term investments at quarter-end.
Debt and balance sheet: Total debt principal was $7.9 billion; long-term debt, net of discounts and current portion, was $7.798 billion. The $2.3 billion revolving credit facility had no outstanding borrowings, although $266 million of letters of credit reduced availability. Current assets were $7.783 billion and current liabilities $7.684 billion. Accrued legal, regulatory and non-income tax liabilities were $2.618 billion, up from $1.811 billion at year-end 2020.
Material changes and unusual items
- Mobility revenue rose 106% year over year in Q2 as rides recovered, while Mobility Take Rate declined to 18.7% from 25.8%, primarily because of higher Driver incentives. Delivery revenue increased 122%, supported by order growth, larger baskets and market expansion; Freight revenue increased 65%.
- Q2 net income included approximately $1.4 billion of unrealized gain on Didi and $471 million of unrealized gain on Aurora investments. These valuation gains substantially boosted GAAP income but are not operating earnings. Q2 other income, net, was $1.943 billion.
- Six-month results included a $1.644 billion gain on the January sale of the Advanced Technologies Group business to Aurora. The sale consideration included Aurora shares; Uber also invested $400 million in Aurora.
- Six-month Mobility revenue included a $600 million accrual for resolving historical UK driver-classification claims. Legal, tax and regulatory reserve changes and settlements totaled $691 million in the six-month Adjusted EBITDA reconciliation.
- Uber agreed to acquire Cornershop’s remaining minority interests in an all-stock transaction, expected to close in Q3 2021. After quarter-end, on July 21, Uber Freight agreed to acquire Transplace for estimated consideration of approximately $2.25 billion, including up to $750 million in Uber shares; closing was expected in late 2021 or the first half of 2022.
Outlook, management commentary and risks
Management described the business as recovering from COVID-19, but said Mobility demand was recovering faster than Driver availability and Delivery demand exceeded Courier availability. Uber said it was increasing Driver incentives to improve near-term supply. The filing gives no specific numerical earnings or revenue guidance. Management expected several operating expenses to rise in absolute dollars as activity recovered and stated that existing funding sources and the available credit line were expected to cover anticipated cash needs for at least 12 months.
Key uncertainties include COVID-19 resurgences and variants, Driver and Courier supply, competition and incentive spending, and legal and regulatory challenges to contractor classification. The UK Supreme Court upheld worker status for certain drivers; Uber said it would treat UK drivers as workers going forward and recorded an accrual for historical claims. Classification disputes remain in other jurisdictions, including the United States. The company also highlighted litigation, non-income tax assessments, insurance exposure, privacy and cybersecurity risks, and the valuation and liquidity risks of substantial minority investments. Some potential legal losses cannot be estimated from the filing.
Uber reported compliance with debt covenants and effective disclosure controls at quarter-end. Adjusted EBITDA is a non-GAAP measure and excludes, among other items, stock-based compensation, certain legal and regulatory costs, and investment gains and losses; it should not be treated as a substitute for GAAP results or cash flow.
Important facts for investors to verify
- How much reported profitability depends on non-cash investment revaluations and the ATG divestiture gain, versus recurring operating performance.
- Whether Mobility and Delivery can improve unit economics while managing Driver and Courier supply, incentives, insurance costs and promotions.
- The ultimate cost and timing of driver-classification claims, including UK historical claims and remaining California and Massachusetts proceedings.
- Liquidity after operating cash use, insurance collateral needs, potential tax prepayments, and the planned Transplace acquisition.
- The fair value, restrictions on sale and potential volatility of Didi, Aurora, Grab and other investments.
- Progress and final consideration for the Cornershop and Transplace transactions, and any resulting share dilution or debt needs.