Overview

Uber is a technology platform that connects consumers with providers of ride services, merchants, delivery service providers, and public transportation networks. The company also connects Shippers with Carriers in the freight industry. Uber is developing new technologies to solve everyday problems.

The classification of Uber’s Drivers as independent contractors rather than employees is currently being challenged in courts, by legislators, and by government agencies around the world. If Uber is required to classify Drivers as employees, the company would incur significant additional expenses, which could negatively impact its business, results of operations, financial position, and cash flows.

Financial and Operational Highlights

In the third quarter of 2024, Uber’s Monthly Active Platform Consumers (MAPCs) grew 13% year-over-year to 161 million. Gross Bookings increased 16% to $41.0 billion, or 20% on a constant currency basis, driven by growth in Mobility and Delivery Trip volumes. Revenue increased 20% to $11.2 billion, primarily due to the increase in Gross Bookings, partially offset by business model changes that classified certain sales and marketing costs as contra revenue.

Net income attributable to Uber was $2.6 billion, which included a $1.7 billion pre-tax unrealized gain on debt and equity securities. Adjusted EBITDA profit was $1.7 billion, up 55% compared to the same period in 2023, driven by improvements in the Mobility and Delivery segments.

For the nine months ended September 30, 2024, net cash provided by operating activities was $5.4 billion, and free cash flow was $5.2 billion. Uber ended the quarter with $9.1 billion in unrestricted cash, cash equivalents, and short-term investments.

Components of Results of Operations

Revenue: Uber generates substantially all of its revenue from fees paid by Drivers and Merchants for use of its platform. The company acts as an agent in these transactions by connecting consumers to Drivers and Merchants. Revenue is expected to fluctuate based on factors such as Trip volume, Driver supply, macroeconomic conditions, and management pricing and promotional activities.

Cost of Revenue: Cost of revenue primarily consists of costs incurred for Mobility and Delivery transactions where Uber is responsible for the services, insurance costs, costs incurred with Carriers for Freight transportation services, credit card processing fees, and other expenses. Cost of revenue is expected to fluctuate in line with changes in Trip volume.

Operations and Support: These expenses primarily consist of compensation for employees supporting operations, customer support, and the allocation of certain corporate costs. Operations and support expenses are expected to decrease as a percentage of revenue as Uber becomes more efficient.

Sales and Marketing: These expenses consist of advertising, product marketing, consumer discounts and promotions, and compensation for sales and marketing employees. Sales and marketing expenses are expected to vary as a percentage of revenue due to the timing of marketing campaigns.

Research and Development: These expenses primarily consist of compensation for engineering, design, and product development employees. R&D expenses are expected to increase on an absolute dollar basis as Uber continues to invest in its platform.

General and Administrative: These expenses primarily consist of compensation for executive, finance, HR, and legal employees, as well as certain impairment charges and legal-related accruals. G&A expenses are expected to decrease as a percentage of revenue as Uber achieves improved fixed cost leverage.

Depreciation and Amortization: These expenses consist of depreciation on buildings, equipment, and leasehold improvements, as well as amortization of intangible assets and capitalized internal-use software.

Interest Expense: Interest expense primarily relates to Uber’s outstanding debt, including accretion of debt discount and issuance costs.

Other Income (Expense): This includes interest income, foreign currency exchange gains/losses, unrealized gains/losses on debt and equity securities, and other items.

Provision for Income Taxes: Uber’s effective tax rate will vary depending on the relative proportion of foreign to domestic income, changes in the valuation allowance on deferred tax assets, and changes in tax laws.

Results of Operations

Revenue increased 20% in Q3 2024 compared to Q3 2023, primarily due to growth in Gross Bookings, partially offset by business model changes that classified certain sales and marketing costs as contra revenue. For the nine months ended September 30, 2024, revenue increased 17% year-over-year.

Cost of revenue, exclusive of depreciation and amortization, increased 20% in Q3 2024 and 18% for the nine months ended September 30, 2024, mainly due to increases in insurance expense, Driver/Courier payments, and credit card processing costs.

Operations and support expenses increased 1% in Q3 2024 and 3% for the nine months ended September 30, 2024, primarily due to higher employee headcount costs, partially offset by decreases in Driver background check costs.

Sales and marketing expenses increased 16% in Q3 2024, primarily due to higher consumer discounts, promotions, and indirect advertising. For the nine months ended September 30, 2024, sales and marketing expenses decreased 9% due to business model changes that classified certain costs as contra revenue.

Research and development expenses decreased 3% in Q3 2024 and 2% for the nine months ended September 30, 2024, primarily due to lower stock-based compensation.

General and administrative expenses decreased 2% in Q3 2024 but increased 21% for the nine months ended September 30, 2024, primarily due to higher legal-related accruals and expenses.

Depreciation and amortization expenses decreased 13% in both Q3 2024 and the nine months ended September 30, 2024, due to various acquired assets becoming fully amortized and depreciated.

Interest expense decreased 14% in Q3 2024 and 15% for the nine months ended September 30, 2024, primarily due to the partial pay down and extinguishment of certain debt.

Other income (expense), net increased significantly in both periods, primarily due to unrealized gains on Uber’s debt and equity securities investments.

Segment Results

Mobility Segment:

• Revenue increased 26% in Q3 2024 and 27% for the nine months ended September 30, 2024, driven by growth in Mobility Gross Bookings.
• Adjusted EBITDA profit increased 31% in Q3 2024 and 34% for the nine months ended September 30, 2024, primarily due to the increase in Gross Bookings, partially offset by higher insurance, Driver payments, and other costs.

Delivery Segment:

• Revenue increased 18% in Q3 2024 and 10% for the nine months ended September 30, 2024, driven by growth in Delivery Gross Bookings and advertising revenue.
• Adjusted EBITDA profit increased 52% in Q3 2024 and 69% for the nine months ended September 30, 2024, primarily due to the increase in revenue, partially offset by higher Courier payments, insurance, and marketing costs.

Freight Segment:

• Revenue increased 2% in Q3 2024 but decreased 2% for the nine months ended September 30, 2024, due to changes in Freight Gross Bookings.
• Adjusted EBITDA declined 46% in Q3 2024 but remained flat for the nine months ended September 30, 2024, primarily due to higher Carrier payments.

Liquidity and Capital Resources

Net cash provided by operating activities was $5.4 billion for the nine months ended September 30, 2024, primarily driven by net income adjusted for non-cash items and a decrease in working capital consumption.

Net cash used in investing activities was $4.6 billion for the nine months ended September 30, 2024, mainly for purchases of marketable securities, partially offset by proceeds from maturities and sales.

Net cash provided by financing activities was $1.3 billion for the nine months ended September 30, 2024, primarily consisting of proceeds from the issuance of new debt, partially offset by debt repayments, share repurchases, and finance lease payments.

Uber ended the quarter with $9.1 billion in unrestricted cash, cash equivalents, and short-term investments. The company believes its existing cash and sources of funding will be sufficient to meet its anticipated cash requirements for at least the next 12 months.

Subsequent to Q3 2024, Uber redeemed $2.0 billion of its outstanding debt, including a $500 million partial redemption of the 2027 Senior Note and a $1.5 billion redemption of the 2026 Senior Note.

Analysis

Uber delivered strong financial results in the third quarter of 2024, with double-digit growth in revenue, Gross Bookings, and Adjusted EBITDA. The company’s Mobility and Delivery segments continued to perform well, driven by increasing consumer demand and Trip volumes.

The main headwinds were the business model changes in some countries that classified certain sales and marketing costs as contra revenue, which negatively impacted revenue growth. However, Uber was able to offset this through operational improvements and cost efficiencies, leading to significant Adjusted EBITDA expansion.

Uber’s liquidity position remains robust, with $9.1 billion in unrestricted cash, cash equivalents, and short-term investments at the end of Q3 2024. The company’s strong cash flow generation and recent debt redemptions further strengthen its financial flexibility.

A key risk factor for Uber is the ongoing legal and regulatory challenges around the classification of Drivers as independent contractors versus employees. If Uber is required to reclassify Drivers as employees, it would result in significant additional expenses that could negatively impact the business. However, the company appears to be managing this risk effectively so far, and the financial impact does not seem imminent based on the information provided.

Overall, Uber’s Q3 2024 results demonstrate the company’s ability to execute on its strategic priorities, drive operational efficiencies, and generate substantial cash flow. The strong financial performance, healthy liquidity, and proactive debt management position Uber well to navigate the evolving regulatory landscape and invest in future growth opportunities.