Uber Q3 2023: Small Profit Despite $2.4B Loss

Uber Reports Q3 2023 Financial Results

Following the market close today, Uber, the leading American ride-hailing service, released its financial performance data for the third quarter. Notably, the company achieved adjusted EBITDA of $8 million, representing a limited level of profitability, despite continuing to report substantial net losses exceeding $2 billion.

Profitability and Revenue Growth

This adjusted profit was realized shortly after Uber’s primary competitor in the US market, Lyft, also demonstrated similar financial success. The achievement highlights a positive trend for the industry.

During the third quarter, Uber’s gross bookings reached $23.1 billion, a significant 57% increase year-over-year. This growth translated into revenues of $4.8 billion, marking a 72% rise compared to the same period last year.

However, despite the revenue gains, Uber recorded a net loss of $2.4 billion. This figure included a $2.0 billion impact stemming from the revaluation of the company’s equity investments in other businesses.

Losses and Analyst Expectations

The company’s net loss per share, unadjusted, amounted to $1.28, exceeding the $0.62 loss per share reported in the third quarter of the previous year.

Financial analysts had predicted a per-share loss of $0.33 alongside revenues of $4.42 billion. Consequently, the company’s stock price has decreased by approximately 5% during after-hours trading.

Looking Ahead to Q4

Prior to discussing individual segment performance, Uber provided its forecast for the fourth quarter. The company anticipates gross bookings between $25 billion and $26 billion, with adjusted EBITDA projected to be between $25 million and $75 million.

While it is typical to question a company of Uber’s size and maturity for relying on metrics like adjusted EBITDA rather than standard GAAP net income, this guidance is significant. Uber has consistently assured investors of reaching this modified profitability milestone during the current year.

• Gross Bookings (Q3): $23.1 billion (up 57% YoY)
• Revenue (Q3): $4.8 billion (up 72% YoY)
• Net Loss (Q3): $2.4 billion
• Adjusted EBITDA (Q3): $8 million

Segment Performance Analysis

Currently, Uber’s food delivery service contributes a significantly larger portion to its overall gross bookings than its traditional ride-hailing operations. This shift in revenue streams suggests a potential reclassification of Uber, positioning it more as a food delivery company rather than simply a taxi application.

The following breakdown illustrates the company’s segment performance based on gross spend:

While ride-hailing has recently demonstrated a faster growth rate compared to food delivery, this reversal is understandable. The surge in Uber Eats’ popularity coincided with the pandemic, as mobility was restricted. As COVID-19 restrictions ease in certain regions, a return to previous trends is being observed.

It’s important to remember that Uber still generates a greater amount of revenue from rides than from food deliveries, resulting in the following revenue figures derived from the aforementioned gross bookings:

The near-equal revenue contribution from ride services and food delivery is a significant development. Furthermore, Uber’s Freight division is now generating enough revenue to be considered a substantial component of the company’s overall operational results.

Turning to profitability, let's examine the adjusted EBITDA results for each segment:

Uber has successfully brought its food delivery business close to adjusted breakeven. This represents considerable improvement compared to the previous year’s performance. Additionally, the ride business largely offset the company’s adjusted corporate losses. Consequently, Uber achieved a modest level of adjusted profitability, reporting $8 million in adjusted EBITDA.

The extent of Uber’s improvement in its adjusted EBITDA metric over the past year is particularly noteworthy.

However, considering all costs and expenses, Uber’s GAAP operating profit amounted to -$572 million. After accounting for interest and other expenses, the company experienced a net loss of $2.44 billion for the period, averaging approximately $800 million per month. The primary driver of this substantial difference between operating and GAAP losses was the decline in the value of its investments.

Specifically, the Chinese government’s regulatory actions concerning Didi negatively impacted Uber’s net income.

In conclusion, while Uber remains unprofitable, it is demonstrating recovery from the pandemic and has achieved adjusted profitability. The next challenge is to reach genuine breakeven status.