The Worst Headline Number in Company History, on the Best Operating Quarter Yet
Uber's FY2021 10-K showed a net loss narrowing 93% for the year - but flagged that most of the improvement was non-operating, from divestiture and equity-stake gains rather than the business itself. This quarter is that same mechanism running fully in reverse, at a scale this site hasn't seen before: net loss attributable to Uber Technologies, Inc. was $(5,930) million, by far the largest quarterly loss in the company's public history, versus $(108) million a year earlier. The driver isn't Uber's operations - it's a combined $5.6 billion pre-tax unrealized loss across all four of the public equity stakes this site has tracked since the Q2 2021 post: $1.9 billion on Grab, $1.7 billion on Aurora, $1.4 billion on Didi, and $462 million on Zomato. All four companies had recently gone public (via IPO or SPAC merger) and all four got hit hard in a brutal first quarter for newly-listed growth and tech stocks - a market-wide repricing that had essentially nothing to do with how Uber's own platform performed.
Strip that out, and this was genuinely Uber's best operating quarter to date. Revenue grew 136% to $6,854 million. Adjusted EBITDA» swung to a $168 million profit from a $(359) million loss a year earlier - the second consecutive quarter of positive Adjusted EBITDA, following Q3 2021's first-ever milestone. Delivery Adjusted EBITDA turned positive for the first time ever, at $30 million, from a $(200) million loss. Free cash flow improved to $(47) million from $(682) million, and net cash from operating activities actually turned positive, at $15 million, for the first time this site has recorded. Every operating metric this site tracks moved in the right direction this quarter - it's just buried under the largest quarterly loss headline Uber has ever reported.
The Prescription
Uber should keep doing exactly what drove this quarter's real progress: Delivery reaching its first-ever positive Adjusted EBITDA quarter is the single most important operating milestone in this filing, proof that the segment's years-long path to profitability (tracked on this site since Q2 2020) has actually arrived, not just narrowed. Combined with Mobility's continued margin strength and operating cash flow turning positive for the first time, the underlying platform is now generating real cash, which is the milestone that should anchor how the company is discussed - not the net loss headline.
What it should stop doing is holding onto minority stakes in newly-public companies (Grab, Aurora, Didi, Zomato) that Uber doesn't control and can't influence, while continuing to run their mark-to-market swings through its own income statement every quarter. This is now the fourth consecutive quarterly post on this site (Q2 2021 gain, Q3 2021 Didi loss, FY2021 mixed, this quarter a combined $5.6 billion loss across all four stakes at once) where these holdings have been the single largest swing factor in Uber's reported GAAP results. Management itself flagged accelerating a sale of the remaining Yandex.Taxi stake following Russia's invasion of Ukraine (see Beyond the Usual below) - the same logic (reducing exposure to a stake Uber doesn't operationally control) should apply to the other three holdings once lock-ups and market conditions allow, rather than letting four other companies' stock prices keep determining the size of Uber's own quarterly headline.
Key Financial Metrics
Q1 2022 vs. Q1 2021 - consolidated, reported in USD
| Metric | Q1 2022 | Q1 2021 | YoY |
|---|---|---|---|
| Revenue | $6,854M | $2,903M | ✅ +136% |
| Adjusted EBITDA» | $168M | $(359)M | ✅ swung to profit, second straight quarter |
| Loss from Operations | $(482)M | $(1,524)M | ✅ loss narrowed 68% |
| Net Loss attributable to Uber | $(5,930)M | $(108)M | ⚠️ largest quarterly loss in company history, driven entirely by a $5.6B unrealized loss across Grab, Aurora, Didi, and Zomato stakes |
| Free Cash Flow | $(47)M | $(682)M | ✅ narrowed 93% |
Balance sheet: Dec 2021 vs. Mar 2022
| Balance sheet metric | Mar 2022 | Dec 2021 | Change |
|---|---|---|---|
| Cash and Cash Equivalents | $4,184M | $4,295M | roughly flat |
| Total Assets | $32,812M | $38,774M | ⚠️ -15% |
| Total Liabilities | $22,994M | $23,425M | roughly flat |
| Long-term Debt, net of current | $9,273M | $9,276M | roughly flat |
| Goodwill | $8,435M | $8,420M | roughly flat |
Total assets fell 15% to $32.81 billion, almost entirely explained by the equity-stake write-downs: the Investments line on the balance sheet fell from $11.81 billion to $6.25 billion in a single quarter, nearly matching the $5.6 billion combined mark-to-market loss. Liabilities and long-term debt held roughly flat, meaning the balance-sheet damage this quarter is concentrated entirely on the asset side, in holdings Uber doesn't operate.
Uber's $5.9 billion net loss this quarter is the largest in company history, but it says almost nothing about how the business performed - it is a market-wide markdown on four minority equity stakes Uber holds in companies it doesn't control (Grab, Aurora, Didi, Zomato), all hit by the same first-quarter-2022 growth-stock selloff. The number that actually reflects operating performance is Adjusted EBITDA, which turned positive for a second straight quarter, with Delivery posting its first-ever profitable quarter and operating cash flow turning positive for the first time on record.
Segment Results
Segment Adjusted EBITDA, Q1 2022 vs. Q1 2021
| Segment | Adj. EBITDA Q1 2022 | Adj. EBITDA Q1 2021 | Change |
|---|---|---|---|
| Mobility | $618M | $298M | ✅ +107% |
| Delivery | $30M | $(200)M | ✅ first-ever positive quarter |
| Freight | not separately broken out in this quarter's MD&A highlights table | — | — |
Mobility more than doubled Adjusted EBITDA year-over-year to $618 million, continuing the margin recovery this site has tracked since the Q3 2021 post, which noted 18 of Uber's top 20 Mobility markets were already Adjusted EBITDA-profitable. Delivery's swing to positive $30 million is the more structurally important number: this is a segment that lost $(1,372) million for full-year 2019 (per the FY2019 post) and has narrowed every single quarter since without ever actually crossing into profit until now - the scale-driven margin story this site has followed for more than two years finally landing.
Beyond the Usual
A $5.6 Billion Combined Markdown Across Four Public Equity Stakes Drove the Entire Net Loss
Uber recognized unrealized losses this quarter of $1.9 billion on its Grab investment, $1.7 billion on its Aurora investments, $1.4 billion on its Didi investment, and $462 million on its Zomato investment - a combined $5.6 billion pre-tax markdown, essentially the entire GAAP net loss for the quarter. All four are minority stakes in companies that went public relatively recently (Didi via June 2021 IPO, Aurora and Grab via 2021 SPAC mergers, Zomato via 2021 IPO) and all four are carried at fair value with quarterly changes flowing directly through Uber's own income statement. This is the fourth consecutive quarter this site has flagged this same mechanism driving Uber's headline GAAP result in one direction or another (Didi gain in Q2 2021, Didi loss in Q3 2021, a net gain for FY2021) - this quarter is simply the case where all four moved the same direction at once, in a broad first-quarter-2022 selloff in newly-public growth stocks, none of it reflecting anything about Uber's own platform.
Uber Is Accelerating an Exit From Its Yandex.Taxi Stake Following Russia's Invasion of Ukraine
Uber disclosed that, in light of the conflict between Russia and Ukraine (which began in February 2022, during this quarter), it is "actively looking for opportunities to accelerate the sale of our remaining holdings in our Yandex.Taxi joint venture" - the same Russia/CIS joint venture whose delivery businesses (Yandex.Eats, Yandex.Lavka, Yandex.Delivery) Uber had already exited in Q4 2021 (see the FY2021 post). Uber also disclosed that members of its management team resigned from Yandex's board in response to the conflict. This continues, and accelerates, a full unwind of Uber's Russia/CIS exposure that had already been underway for unrelated commercial reasons before the war began.
Accrued Legal and Regulatory Liabilities Edged Down for the First Time This Site Has Tracked
Uber's aggregate recorded liability for legal, regulatory, and non-income tax matters fell slightly to $2.1 billion as of March 31, 2022, from $2.2 billion at year-end 2021 - the first quarter-over-quarter decline this site's coverage has recorded (prior quarters showed this reserve growing steadily, from $1.8 billion at year-end 2020 through $2.3 billion by Q3 2021). A single quarter's dip doesn't establish a new trend on its own, but it's worth tracking whether this continues or reverses in coming quarters.
Stock Price Since Last Quarter
Uber's stock declined steadily through the first quarter of 2022, continuing the trend from late 2021: from a December 31, 2021 close of $41.93, down to $37.40 in January, $36.03 in February, and $35.68 at the March 31, 2022 close - down roughly 15% for the quarter. The decline roughly tracks the same broad growth-stock repricing that hit Uber's own equity stakes in Grab, Aurora, Didi, and Zomato this quarter, suggesting the market was pricing similar risk into Uber's own multiple even as its underlying operating results (Adjusted EBITDA turning positive for a second straight quarter, Delivery's first profitable quarter) kept improving.
Target Valuation Range
Undervalued. Uber traded at an EV/Revenue multiple of roughly 4.0x against TTM revenue as of this quarter's close - continuing the multiple compression this site has tracked through 2021 (from ~9.7x in Q1 2021 to ~4.7x at FY2021 year-end) into 2022, even as Adjusted EBITDA has now been positive for two consecutive quarters. This reads as the market applying the same broad 2022 growth-stock discount to Uber that hit its own equity holdings, not a reassessment of Uber's specific operating trajectory, which has been improving each quarter.
With approximately 1,963,660,253 shares outstanding as of May 2, 2022 (per the 10-Q's cover page) and a March 31, 2022 close of $35.68, Uber's market capitalization was approximately $70.1 billion. Against total liabilities of $22.99 billion and cash and cash equivalents of $4.18 billion, enterprise value was roughly $88.9 billion - down from the ~$101.0 billion calculated in the FY2021 post, on the stock's quarterly decline. Against TTM revenue of roughly $21.4 billion (Q2 2021's $3,929 million, Q3 2021's $4,845 million, Q4 2021's approximately $5,778 million, and this quarter's $6,854 million), that implies an EV/Revenue» of roughly 4.0x.
| Mar 2022 | Dec 2021 | |
|---|---|---|
| TTM Revenue | $21.4B | $17.46B |
| Enterprise Value | $88.9B | $101.0B |
| EV/Revenue | 4.0x | 4.7x |
A full DCF still isn't attempted here: Uber's own GAAP earnings this quarter were dominated almost entirely by a non-operating $5.6 billion markdown that makes any near-term GAAP earnings projection meaningless, and while Adjusted EBITDA has now turned positive for two straight quarters, that's still a short run to extrapolate a multi-year cash-flow forecast from. This site will revisit a full valuation exercise once Adjusted EBITDA profitability has a longer track record and the equity-stake volatility settles into a smaller share of quarterly results.
Uber Technologies, Inc.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 2022, filed with the SEC in May 2022.