Uber sees positive cash flow for the first time
Uber reported free cash flow of $382 million for the first time ever, indicating that the ridesharing company’s “hardcore” efforts to control costs are starting to pay off, even amid an economy in decline.
Uber is still burning a lot of money, but mostly in the area of its investments in other startups. The company posted record revenue of $8.1 billion in the second quarter of 2022, a 105% spike from the same quarter last year. And he said he lost $2.6 billion, which was mostly attributable to his stake in Aurora, Grab and Zomato. Additionally, he lost $470 million in stock-based compensation. (Uber is considering selling its stake in Indian delivery startup Zomato, Reuters reports, in another move to streamline its balance sheet.)
But, overall, Uber exceeded expectations, driven primarily by growth in its ride-sharing and delivery businesses. Gross bookings, or the total customer payments to Uber before payments to drivers and other fees or discounts, rose 33% year-over-year to $29.1 billion. Of this amount, mobility accounted for $13.4 billion while delivery grabbed $13.9 billion.
People took more Uber rides this quarter, 1.87 billion to be exact, or 21 million rides per day. This represents a 24% increase in the number of journeys year-on-year.
But the positive cash flow, which indicates that Uber is now generating more money from its business operations than it is losing, is the icing on the cake for Dara Khosrowshahi, CEO of the company, who swore more earlier this year that Uber would need to get “cost unconditional.”
“Last quarter, I challenged our team to meet our profitability commitments even faster than expected – and they delivered,” Khosrowshahi said in a statement.
The results indicate “Uber’s ability to generate profits while dealing with inflationary pressures and driver shortages that still persist in some cities,” Wedbush’s Dan Ives said in a research note.
Knowing that profitability in the traditional sense can remain elusive for the company, Khosrowshahi had instead set a goal of achieving profitability based on free cash flow rather than adjusted earnings before interest, taxes, depreciation and amortization. (EBITDA), noting that this is what institutional investors expect from the company.
Uber has long been criticized for how it calculates its adjusted earnings. The definition of business EBITDA includes an unusually long list of exclusions and is widely considered an inaccurate measure of overall business profitability.
There’s still a lot of uncertainty surrounding Uber’s business, including legal disputes over how the company classifies its drivers. A Massachusetts state judge recently rejected a ballot measure backed by Uber and Lyft to enshrine the classification of ride-hailing drivers as independent contractors.
Still, the company appears to be doing a better job of adding new drivers to the platform, reporting that it now has 5 million drivers worldwide, a 31% year-over-year increase. Earlier this year, a nationwide driver shortage forced Uber to overspend on driver incentives and send its stock soaring. The company said last week it would start allowing drivers to see fares in advance before accepting travel requests.
Uber shares are trading up 15% since the market opened.
Updated August 2 at 11:13 a.m. ET: Updated to include news that Uber is considering selling its stake in Zomato.