Uber Technologies, Inc. — Q1 2020 Form 10-Q
Reporting period: Three months ended March 31, 2020; unaudited results compared with Q1 2019 unless otherwise noted. Uber operates ridesharing, food delivery, freight, mobility, and technology offerings. COVID-19 began materially affecting activity during March, so management cautioned that Q1 results may not indicate later-period or full-year performance.
Financial and operating performance
| Metric | Q1 2020 | Q1 2019 | Change / context |
|---|---|---|---|
| Revenue | $3.543 billion | $3.099 billion | +14% reported; +16% constant currency |
| Net loss attributable to Uber | $(2.936) billion | $(1.012) billion | Widened substantially, principally reflecting investment and asset impairments |
| Loss from operations | $(1.263) billion | $(1.034) billion | Operating margin was approximately (36)% versus (33)% |
| Adjusted EBITDA loss | $(612) million | $(869) million | Improved 30%; margin on Adjusted Net Revenue was (18.8)% versus (31.5)% |
| Cash used in operating activities | $(463) million | $(722) million | Lower cash use year over year |
| Cash and cash equivalents, including restricted cash | $9.529 billion | $7.682 billion | Balance-sheet date cash measure; unrestricted cash, cash equivalents and short-term investments were $9.0 billion |
| Long-term debt, net of current portion | $5.703 billion | $5.707 billion at Dec. 31, 2019 | Separately, reported aggregate indebtedness was $7.4 billion including Careem convertible notes |
Revenue by offering: Rides $2.470 billion (+2%); Eats $819 million (+53%); Freight $199 million (+57%); Other Bets $30 million (+66%); and ATG and Other Technology Programs collaboration revenue $25 million. Gross Bookings were $15.776 billion (+8% reported; +10% constant currency), Adjusted Net Revenue was $3.256 billion (+18%), and Take Rate was 20.6%, up 1.8 percentage points.
Activity and segment performance: Monthly Active Platform Consumers were 103 million (+11%) and Trips were 1.658 billion (+7%). Rides Adjusted EBITDA rose to $581 million from $192 million. Eats Adjusted EBITDA loss was $313 million, versus $309 million; Freight loss was $64 million versus $29 million; Other Bets loss was $63 million versus $42 million; and ATG and Other Technology Programs loss was $108 million versus $113 million. These segment and company Adjusted EBITDA measures are non-GAAP.
Material changes and unusual items
- COVID-related restrictions reduced demand for Rides and New Mobility. Rides Gross Bookings declined 39% year over year in March, although Q1 Rides Gross Bookings were down 3% on a constant-currency basis. Eats Gross Bookings grew 54% constant currency for the quarter.
- Pre-tax impairment charges totaled approximately $2.1 billion, primarily a $1.690 billion impairment of Didi equity securities and a $173 million credit-loss allowance on Grab securities. New Mobility also incurred $193 million of goodwill and other asset impairment charges.
- Q1 results included a $154 million gain on the Uber Eats India divestiture to Zomato. Uber received Zomato securities valued at $171 million and a $35 million tax-reimbursement note.
- Careem was acquired on January 2 for approximately $3.0 billion of consideration, including $1.325 billion cash and convertible-note consideration. Its acquired operations contributed an $81 million pre-tax loss; revenue was not material. A preliminary purchase-price allocation included $2.515 billion goodwill and $540 million intangible assets.
- Stock-based compensation increased to $277 million from $11 million. Interest expense declined to $118 million from $217 million, primarily because convertible notes converted upon the 2019 IPO.
- Following quarter-end, Uber paid $891 million of Careem notes on April 1. On May 4 it announced Eats exits or transfers in certain markets; on May 6 it announced approximately 3,700 job reductions; and on May 7 it agreed to transfer JUMP assets to Lime for equity and invest $85 million in a secured convertible note.
Liquidity, outlook, risks and contingencies
- Uber reported $9.0 billion of unrestricted cash, cash equivalents and short-term investments at March 31, plus a $2.3 billion revolving credit facility with no balance outstanding. Letters of credit reduced facility availability; $219 million of letters of credit were charged against it. Management said available funding was expected to meet anticipated needs for at least 12 months, while noting active monitoring and possible further liquidity-preservation actions.
- Investing cash outflow was $1.856 billion, mainly reflecting the $1.346 billion net cash outflow for the Careem acquisition, $493 million of marketable-security purchases and $198 million of capital expenditure. Financing cash outflow was $63 million.
- No specific revenue, profitability or other numerical guidance was provided. Management expects near-term expense reductions in response to COVID-19, while the timing and extent of recovery remain uncertain. It stated that Rides and New Mobility demand could remain weak after restrictions ease.
- Legal, regulatory and non-income-tax reserves were $1.7 billion at March 31. Driver classification disputes, including California AB5, are a significant uncertainty; the company said it could not estimate a range of loss for those claims. Other disclosed exposures include a possible loss of up to $60 million or more above accrual related to Levandowski indemnification and up to $125 million for Swiss social-security reclassification matters.
- Key risks include pandemic duration and demand impacts; driver classification and other regulatory challenges; competition and incentive needs; insurance and litigation exposure; and valuation and liquidity risks in illiquid minority investments. The filing also describes foreign-exchange and interest-rate exposure.
- Management concluded disclosure controls and procedures were effective at a reasonable assurance level as of quarter-end and reported no material changes to internal control over financial reporting during the quarter.
Most important facts for investors to verify
- Whether Rides demand recovers and whether Eats growth and improved Take Rate can offset Rides weakness without unsustainable incentives or losses.
- Cash burn and liquidity after the April Careem-note payment, including remaining Careem-note obligations and actual availability under the revolving facility.
- Further valuation changes or credit losses in Didi, Grab and other private investments, and the effect of impairments on reported earnings.
- Developments in driver-classification cases, AB5 and other regulatory proceedings, including potential costs beyond recorded reserves.
- Execution and financial consequences of the announced workforce reduction, Eats market exits, and JUMP/Lime transaction.