The Quarter Lockdowns Actually Hit, and Uber Restructured Around It
Uber's Q1 2020 10-Q showed COVID-19 arriving mid-quarter with mixed effects - Rides margin improving even as Gross Bookings softened, and a $1.9 billion non-cash Didi/Grab markdown dominating the GAAP headline. This 10-Q, covering the quarter ended June 30, 2020, is the first full quarter under global lockdowns, and the effect on Uber's core ridesharing business is now unambiguous: consolidated revenue fell 29% year-over-year to $2,241 million (from $3,166 million), driven by what was previously called the Rides segment - renamed Mobility this quarter as part of a broader segment restructuring (five segments collapsed to four: Mobility, Delivery, Freight, and ATG and Other Technology Programs, with Other Bets folded into Mobility) - whose revenue collapsed 67% to $790 million as ridesharing demand evaporated under lockdown orders. Delivery (the renamed Eats segment) moved the opposite direction, more than doubling revenue (+103%) to $1,211 million on stay-at-home food-delivery demand.
Mobility Segment Adjusted EBITDA fell 90% to $50 million from $506 million a year earlier - the segment that funded all of Uber's corporate overhead as recently as the Q3 2019 post barely broke even this quarter. Delivery's Adjusted EBITDA loss actually narrowed 19% to $232 million even as its revenue more than doubled, a genuine sign of improving delivery unit economics at scale, even if the segment remains meaningfully loss-making. Consolidated Adjusted EBITDA loss widened to $837 million from $656 million, and net loss attributable to Uber narrowed sharply to $1,775 million from $5,236 million - but that comparison is misleading, since the year-ago Q2 2019 figure was inflated by roughly $3.9 billion of one-time IPO-triggered stock-based compensation charges (covered in the Q2 2019 post); on a cleaner operating basis, this quarter's results were materially worse than a year earlier.
Uber's response was blunt: the company recorded $382 million of restructuring and related charges this quarter - the first restructuring activity in the company's public history - including severance and other termination benefits, and used the moment to shut down JUMP, its owned e-bike and e-scooter business (part of the former Other Bets segment), taking site-closure and asset-impairment charges in the process. Uber also disclosed, as a subsequent event, a definitive agreement to acquire Postmates for approximately $2.65 billion in an all-stock deal (84 million shares at a fixed $31.45 price), announced July 5, 2020 - Uber's clearest statement yet that it intends to consolidate the U.S. food-delivery market rather than simply compete in it. Separately, the previously-pending Cornershop acquisition closed (in most jurisdictions) on July 6, 2020, and Uber acquired Routematch, a transit-agency software company, on July 14, 2020.
The Prescription
Uber's decision to shut JUMP rather than continue funding it through the pandemic is the right call by this site's own standard from the Q3 2019 post - Other Bets' losses had grown six-fold in a single 2019 quarter with no visible cap, and a business requiring physical device fleets in cities under lockdown is precisely the kind of early-stage bet that should be cut rather than defended when cash preservation becomes a real question. The Postmates acquisition, by contrast, deserves real scrutiny before the next post can bless it: paying $2.65 billion in stock for a business that will roughly double Uber's addressable Delivery market share (per public reporting on the two companies' respective positions at signing) is a bet that scale economics in food delivery outweigh integration risk and dilution - a reasonable bet, but one this site should revisit once combined post-close numbers are available, not assume works simply because Delivery's own standalone margin trend this quarter was genuinely encouraging.
What it should stop doing: treating restructuring as a one-time COVID response rather than reassessing baseline corporate cost structure. $84 million of this quarter's $382 million restructuring charge sat in unallocated Corporate G&A and Platform R&D - a reminder that headcount growth in central functions, not just city-level Mobility and Delivery operations, needs the same scrutiny going forward, especially with Mobility's overhead-funding capacity now reduced to a fraction of what it was a year ago.
Key Financial Metrics
Q2 2020 vs. Q2 2019 - consolidated, reported in USD
| Metric | Q2 2020 | Q2 2019 | YoY |
|---|---|---|---|
| Revenue | $2,241M | $3,166M | ⚠️ -29% |
| Adjusted EBITDA» | $(837)M | $(656)M | ⚠️ loss widened 28% |
| Loss from Operations | $(1,607)M | $(5,485)M | ✅ loss narrowed (Q2 2019 included ~$3.9B one-time IPO stock comp) |
| Net Loss attributable to Uber | $(1,775)M | $(5,236)M | ✅ loss narrowed (same one-time distortion) |
| Restructuring and related charges | $382M | $0 | new this quarter |
Balance sheet: Dec 2019 vs. Jun 2020
| Balance sheet metric | Jun 2020 | Dec 2019 | Change |
|---|---|---|---|
| Cash and Cash Equivalents | $6,754M | $10,873M | ⚠️ -38% |
| Total Assets | $28,240M | $31,761M | ⚠️ -11% |
| Total Liabilities | $17,719M | $16,578M | ⚠️ +7% |
| Long-term Debt, net of current portion | $6,691M | $5,707M | ⚠️ +17% |
| Goodwill | $2,518M | $167M | roughly flat vs. Q1's $2,566M (Careem) |
Cash and cash equivalents fell 38% to $6.75 billion over six months, and long-term debt rose 17% to $6.69 billion - Uber raised additional debt during the first half of 2020 to shore up liquidity heading into the pandemic's uncertain trajectory, consistent with the broader corporate playbook many companies followed in the same period. The $1.9 billion Didi/Grab-related equity-securities markdown from Q1 continued to weigh on "Investments" and "Equity method investments" balances, which fell further to $8.8 billion and $1.1 billion respectively.
Uber's core ridesharing business took its worst quarter as a public company - Mobility revenue fell 67% and Segment Adjusted EBITDA fell 90% - while Delivery more than doubled revenue and modestly improved its margin. Uber responded by cutting costs (its first-ever restructuring, $382M), killing a money-losing bet (JUMP), and doubling down on delivery scale (the pending $2.65B Postmates deal) - a genuine strategic pivot forced by the pandemic rather than a routine quarter.
Segment Results
Segment revenue and Segment Adjusted EBITDA, Q2 2020 vs. Q2 2019 - note the segment structure changed this quarter (five segments collapsed to four; Other Bets folded into Mobility)
| Segment | Revenue Q2 2020 | Revenue Q2 2019 | Adj. EBITDA Q2 2020 | Adj. EBITDA Q2 2019 |
|---|---|---|---|---|
| Mobility (formerly Rides, now includes former Other Bets) | $790M | $2,376M ⚠️ -67% | $50M | $506M ⚠️ -90% |
| Delivery (formerly Eats) | $1,211M | $595M ✅ +103% | $(232)M | $(286)M ✅ loss narrowed 19% |
| Freight | $211M | $167M ✅ +27% | $(49)M | $(52)M ✅ loss narrowed 6% |
| ATG and Other Tech | $25M (Toyota/DENSO collaboration revenue) | $0 | not separately broken out in this quarter's summary table | — |
Because comparative periods were not recast under the new four-segment structure, the Mobility figures above include the former Other Bets business (New Mobility - what remained of it after JUMP's shutdown) for Q2 2020 but the Q2 2019 comparison reflects only the old Rides segment - a structural break the 10-Q itself flags, meaning the -67%/-90% figures somewhat overstate the pure ridesharing decline versus a like-for-like comparison, though the direction and rough magnitude are not in question given Mobility Gross Bookings fell 73% on a constant-currency basis. Delivery's improving Adjusted EBITDA margin at more than double the revenue is the clearest positive signal in the quarter - genuine evidence that Delivery unit economics scale favorably with volume, not just that COVID temporarily inflated demand.
Beyond the Usual
JUMP Shut Down; Uber's Restructuring Included $298 Million of Severance and Site-Closure Costs
Uber recorded $382 million of restructuring and related charges this quarter - $210 million of severance and other termination benefits, $107 million of site-closure costs, and $65 million of other costs - split across Mobility ($76M), Delivery ($33M), Freight ($7M), ATG ($59M), the former Other Bets/JUMP business ($123M, including $31M of severance, $27M of site closures, and $65M of other JUMP-exit costs), and unallocated Corporate G&A ($84M). Of the total, $261 million was cash-settled, expected to be fully paid by the end of 2020. This is the first restructuring activity in Uber's history as a public (or, per the filing, at all disclosed) company.
Subsequent Event: $2.65 Billion All-Stock Agreement to Acquire Postmates
On July 5, 2020 - five days after this quarter closed - Uber entered a definitive agreement to acquire Postmates, a U.S. on-demand delivery platform, for approximately $2.65 billion, payable entirely in Uber common stock (roughly 84 million shares at a fixed $31.45 price), with the deal expected to close in Q1 2021. Uber also agreed to provide Postmates up to $200 million of interim financing before closing, and could owe Postmates a termination fee of up to $146 million if the agreement falls through. Separately, the previously-pending Cornershop acquisition (first disclosed in the Q3 2019 post) closed in most jurisdictions on July 6, 2020, and Uber acquired transit-software company Routematch on July 14, 2020 for approximately $115 million (cash plus stock).
Uber entered a call option agreement giving it the right, beginning May 2022, to acquire all outstanding equity of Lime (the e-scooter company) at fair value, and amended its existing commercial agreement with Lime - a sign Uber is choosing to pursue micromobility through minority ownership and optionality (it holds roughly 35% of Lime on an as-converted basis) rather than direct operation, following JUMP's shutdown this same quarter.
Stock Price Since Last Quarter
Uber's stock recovered through the second quarter despite the operating deterioration: from a March 31, 2020 close of $27.92 to an April close of $30.27, a May close of $36.32 (the quarter's high point, roughly back to the January 2020 level), and a June 30, 2020 close of $31.08 - up 11% for the quarter overall, even as Mobility revenue was falling 67% - consistent with the broader market's sharp post-March-crash recovery, a dynamic separately documented across this site's other COVID-era coverage (see, for example, Lyft's Q2 2020 post).
Target Valuation Range
Too early to call a durable valuation. Uber's ~4.2x EV/Revenue multiple already priced in a recovery well ahead of any confirming numbers - the stock rose 11% this quarter even as Mobility revenue collapsed 67% - so a real verdict has to wait for at least one quarter of the combined, post-Postmates business to actually report.
With approximately 1,746 million shares issued and outstanding as of June 30, 2020 (per the balance sheet) and a June 30, 2020 close of $31.08, Uber's market capitalization was approximately $54.3 billion. Against long-term debt of $6.7 billion and cash and cash equivalents of $6.75 billion, enterprise value was roughly $54.2 billion - up from the ~$45.9 billion calculated in the Q1 2020 post, driven by the stock's recovery even as the underlying business shrank. Against TTM revenue of roughly $13.0 billion (calculated as FY2019's $14,147 million, less Q2 2019's $3,166 million and Q1 2019's $3,099 million, plus this quarter's $2,241 million and Q1 2020's $3,543 million), that implies an EV/Revenue» of roughly 4.2x - a notable expansion from the prior quarter's ~3.1x, on a smaller trailing-revenue base. Uber's revenue base is now meaningfully smaller on a trailing basis than it was even two quarters ago - a direct consequence of Mobility's collapse not being fully offset by Delivery's growth - while the stock priced in a recovery ahead of any confirming numbers.
A full DCF still isn't attempted here: the pending Postmates acquisition, not yet closed, would materially change Uber's Delivery-segment scale and competitive position once it does, JUMP's shutdown removes a line item from any forward model, and the pandemic's second-half trajectory remained genuinely uncertain as of this filing's August 2020 date. This site will revisit valuation once the Postmates deal closes and at least one full quarter of the combined, post-restructuring business is reported.
Uber Technologies, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, filed with the SEC in August 2020.