UBER • 10-Q • Q1 2023 • Positive

Uber Achieves Record Profitability as Core Platform Synergies Drive Margin Expansion

May 03, 2023 • 1 min read

TL;DR

Uber delivered its strongest quarter of profitability with $761M in adjusted EBITDA, marking a significant inflection point in its path to sustainable profitability. Gross Bookings grew 19% YoY to $31.4B, driven by Mobility recovery and continued Delivery strength. The company's platform advantages are creating meaningful cross-business synergies, with 26% of active consumers now using both Mobility and Delivery. Operating leverage is improving with revenue growing faster than cost of revenue, s

Financial Performance Overview: Revenue grew 29% YoY to $8.8B, with Mobility revenue up 72% YoY to $4.3B and Delivery revenue up 12% YoY to $2.9B. Gross Bookings increased 19% YoY to $31.4B, while take rate expanded 200bps to 28.0%. Adjusted EBITDA of $761M represented an all-time high and 481% YoY growth, with margin expanding 530bps to 8.6%. Operating cash flow was $1.2B, demonstrating strong conversion of profitability to cash generation.
Strategic Initiatives and Operational Changes: Management is leveraging its platform to drive cross-business synergies, with significant success in consumer overlap between services. The company expanded its advertising business, which reached a $650M run rate. New verticals like grocery delivery saw 65% YoY growth. The Uber One membership program now has 12M+ members globally, driving higher engagement and retention. Strategic partnerships with Albertsons and other retailers are expanding TAM in grocery and retail delivery.
Market Position and Competitive Dynamics: Uber maintained or gained category leadership in key markets, with particularly strong performance in US rideshare. Monthly Active Platform Consumers (MAPCs) grew 13% YoY to 130M, with frequency increasing 6% YoY. Driver supply improved significantly with 5.7M active drivers, up 33% YoY. The company's scale advantages are widening vs competitors, with network effects driving improved marketplace efficiency and lower customer acquisition costs.
Operational Efficiency and Profitability: Operational leverage improved significantly with platform costs growing slower than revenue. Take rates expanded across both Mobility and Delivery segments. Driver incentives normalized as supply improved, contributing to margin expansion. G&A expenses as a percentage of revenue declined 300bps YoY, demonstrating improved cost discipline. The company's fixed cost base is now better optimized for profitable growth.
Growth Catalysts and Material Risks: Key growth drivers include international expansion, particularly in Latin America and APAC, new vertical penetration in grocery and retail delivery, and B2B opportunities through Uber for Business. Primary risks include regulatory challenges around worker classification, intensifying competition in food delivery, and potential macroeconomic headwinds affecting consumer discretionary spending. Management is mitigating risks through geographic diversification and product innovation.

Revenue

$8.8B ( YoY) with Mobility $4.3B ( YoY), Delivery $2.9B ( YoY)

↑ +29%

Rd Spend

$747M ( YoY), of revenue

↑ +24%

Net Income

$595M vs ($5.9B) loss in Q1'22

Gross Margin

(+340bps YoY)

↑ 51.2%

Free Cash Flow

$1.2B ( YoY)

↑ +247%

Operating Margin

(vs in Q1'22)

↑ 6.8%

Growth Indicators

130M MAPCs ( YoY)

↑ +13%

Arr Or Bookings ↑$31.4B Gross Bookings (+19% YoY)

Retention Metrics ↑26% of users on multiple services, up 500bps YoY

Key Risks

Worker classification regulation could increase costs by 20-30%
Delivery competition may pressure take rates in key markets
Macroeconomic headwinds could impact consumer spending
Rising interest rates affecting capital costs

Key Opportunities

International expansion in LatAm and APAC ($50B+ TAM)
Grocery/retail delivery penetration (<3% of $1T+ TAM)
B2B growth through Uber for Business (13% of Mobility bookings)
Advertising business scaling ($650M run rate with 70%+ margins)

Bottom Line

Uber's Q1 results demonstrate accelerating momentum in both growth and profitability, with platform synergies driving sustainable competitive advantages. The combination of expanding take rates, improving operational leverage, and cross-business synergies suggests a clear path to sustained profitability. Key metrics to watch include consumer overlap between services, Uber One membership growth, and advertising revenue scaling.