Uber is now a profitable, cash-generating machine


A dog in pink shades and covered in dollar bills in California.
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If you look at the market’s reaction to Uber’s quarterly results, out this morning, you might think the company performed poorly. The stock is down about 6%, most likely because the company missed the market’s expectations for quarterly revenue by about $100 million.

However, despite the expectations gap, it was a good quarter for the ride-hailing company, which finally posted a GAAP operating profit in addition to other profitability benchmarks that indicate all the years of investing in its business are paying off.

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In fact, Uber seems to be firing on all cylinders across most of its operating units, leading it to forecast revenue for Q3 2023 ahead of analysts’ expectations.

One could argue that the company’s results bode well for its U.S. rival Lyft, but the latter’s shares are trending even lower than Uber’s, indicating that the market is not convinced that the smaller company will report strong results.

This morning, let’s dig into Uber’s results, check how the stock market is thinking about the company, and then close with notes on what we might see from Lyft when it reports in around a week’s time.

Finally, a profit

Uber’s gross bookings reached $33.6 billion in the second quarter, up 16% from $29.1 billion a year ago. Gross bookings represent top-level spending by Uber customers in a period, from which Uber earns a fraction as revenue. In Q2 2023, Uber’s revenue totaled $9.23 billion, up 14% from $8.1 billion a year earlier.

As we mentioned above, Uber finally turned an operating profit, reporting $326 million in Q2 compared to an operating loss of $713 million a year earlier. It’s taken Uber an incredibly long time and tens of billions of dollars in investment to flip to a profit, but it did manage to pull it off.

Operating cash generation also soared to $1.19 billion, up from $382 million a year ago. Again, that’s a big jump in the right direction.

Segment results

How did Uber manage to do that, though? To put it simply: Its two core businesses, ride-hailing and delivery, pulled in more revenue than they did gross bookings in markets outside the U.S., which led to better profitability for those businesses.

Gross bookings for ride-hailing rose 25% to $16.7 billion in Q2 2023, up from $13.4 billion a year ago, with revenue up a good 38% to $4.89 billion.

Meanwhile, gross bookings for Uber’s delivery business increased by a more modest 12% in the second quarter, and revenues climbed 14% to $3.06 billion.

Ride-hailing was once again Uber’s biggest source of gross bookings, drove more revenue than any other segment and also benefited adjusted EBITDA the most.

Breaking Uber’s results down by geography is another useful way to better understand the business. The company’s revenues in the United States and Canada rose just 4% in the second quarter from a year earlier. In contrast, revenue increased by 30% in Latin America and 31% in both EMEA (Europe, the Middle East and Africa) and the Asia-Pacific.

That indicates the U.S. and Canada, Uber’s largest markets, are perhaps more profit centers today than growth engines.

Turning to Lyft, that incredibly modest 4% bump in U.S. and Canadian revenue is likely why its stock is in the gutter today. If Lyft had greater exposure to international markets, it might be a different story.

So what?

A public company makes more money. Why should we care?

A few reasons. Uber’s history is such a case of aggressive investment followed by losses that its unprofitability nearly became a punch line. However, with steady leadership and enough time, the company has shown it can turn its core businesses into profit drivers that also kick off a mountain of cash.

The startup model can be applied to non-software businesses in certain cases. And consumer demand really is recovering around the world. Uber wouldn’t be in the position it is today if that weren’t true.

But I would argue that Uber’s results are not merely the result of work, patience and waiting for the market to rebound. No, the company has built its business by making incremental additions to its products and looking to partnerships instead of working at everything in-house.

You can see that in its advertising results. After noting that it launched advertisements on Uber, Uber Eats, Drizly, and in-car tablets in the second quarter, and “expanded advertising formats with the addition of Sponsored Items opportunities for CPG brands on Uber Eats,” the company said its revenue run rate from advertising exceeded $650 million. That’s a lot.

Uber is also partnering with Waymo for self-driving cars and is working with Serve to get more robot delivery units on its platform. It’d do us good to remember that the company was spending heavily on its own self-driving technology before it got rid of that business in 2020.

All that work, alongside the incremental rollouts of UberX Shares, Uber One and other product lines in new markets, has resulted in a healthy company. It wasn’t easy.

The market may be unhappy in this moment, but it’s worth acknowledging the progress: Uber has seemingly turned a corner with its profitability, forecast more revenue than investors expected for the third quarter, and is benefiting from selling a diverse array of products across various geographies.

It took a while, but Uber really has stuck the landing. At last.

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