UBER Uber Posted a Rare Quarterly Profit in Q4 2022 - After Paying $733 Million to Settle a UK Tax Dispute

A First Full Year of Positive Free Cash Flow - Capped by a $733 Million UK Tax Settlement

Uber's Q3 2022 10-Q showed a fourth straight positive Adjusted EBITDA quarter and the stock's first quarterly gain since Q4 2021. The FY2022 10-K confirms the year-long trend held for a full twelve months: full-year Adjusted EBITDA was $1,713 million, swinging from a $(774) million loss in 2021 - a $2.5 billion improvement - and full-year free cash flow reached $390 million, Uber's first full fiscal year of positive free cash flow, versus $(743) million in 2021. Full-year revenue grew 83% to $31,877 million, helped partly by UK business-model changes and Freight's Transplace acquisition.

Reading the fourth quarter in isolation (FY Adjusted EBITDA of $1,713 million less the nine-month figure of $1,048 million already disclosed in the Q3 2022 post) shows Q4 2022 Adjusted EBITDA of roughly $665 million, the largest quarterly figure this site has recorded, up from Q3's $516 million. More strikingly, net loss attributable to Uber for the full year was $(9,141) million - smaller in magnitude than the nine-month figure of $(9,736) million, implying Q4 alone swung to a net profit of roughly $595 million, only the second profitable quarter in Uber's public history after Q2 2021's Didi-driven gain. That profit came despite Uber making a $733 million cash payment during the quarter to settle all outstanding HMRC VAT claims in the UK for periods before March 14, 2022 - a one-time cash outflow large enough to swing derived Q4 free cash flow negative (roughly $(303) million, per FY FCF of $390 million less the nine-month $693 million) even as the P&L quarter was Uber's best yet.

The Prescription

Uber should keep pointing to the full-year picture as the clean signal: Adjusted EBITDA positive and growing every quarter of 2022, free cash flow positive for the first full fiscal year, and Delivery Adjusted EBITDA turning a full-year profit ($551 million) for the first time. That's a real, multi-quarter operating turnaround, not a one-off.

What it should explain more clearly is the UK HMRC settlement's effect on this quarter's cash flow: a $733 million one-time payment is large enough to turn an otherwise-strong cash quarter negative on a standalone basis, and investors reading only the free-cash-flow headline without this context could mistake a one-time legacy tax resolution for a reversal of the free-cash-flow trend established over the first three quarters of the year. Uber's own MD&A does disclose this clearly, which is the right instinct - it should keep doing so every time a legacy liability like this gets resolved for cash.

Key Financial Metrics

FY 2022 vs. FY 2021 - consolidated, reported in USD

Metric	FY 2022	FY 2021	Change
Revenue	$31,877M	$17,455M	✅ +83%
Adjusted EBITDA»	$1,713M	$(774)M	✅ swung to profit, +$2.5B
Loss from Operations	$(1,832)M	$(3,834)M	✅ loss narrowed 52%
Net Loss attributable to Uber	$(9,141)M	$(496)M	⚠️ widened sharply, on a $7.0B pre-tax unrealized equity-stake markdown
Free Cash Flow	$390M	$(743)M	✅ first full year positive

Balance sheet: Dec 2021 vs. Dec 2022

Balance sheet metric	Dec 2022	Dec 2021	Change
Cash and Cash Equivalents	$4,208M	$4,295M	roughly flat
Total Assets	$32,109M	$38,774M	⚠️ -17%
Total Liabilities	$23,605M	$23,425M	roughly flat
Long-term Debt, net of current	$9,265M	$9,276M	roughly flat
Goodwill	$8,263M	$8,420M	roughly flat

The Investments balance-sheet line fell to $4,401 million from $11,806 million at year-end 2021 - down 63% for the year, continuing the equity-stake markdown story this site has tracked since Q1 2022: a combined $7.0 billion pre-tax unrealized loss for the full year across Aurora (-$3.0B), Grab (-$2.1B), Didi (-$1.0B), Zomato (-$747M change), and other holdings (-$142M). Cash held roughly flat despite the $733 million HMRC payment, and liabilities/debt/goodwill again stayed roughly flat, confirming the balance-sheet story for the year was almost entirely about the equity holdings.

Uber closed out 2022 with its first full year of positive free cash flow and Adjusted EBITDA growing every quarter - and, by this site's derived math, its best single Adjusted EBITDA quarter yet in Q4, alongside only its second-ever profitable quarter on a GAAP basis, even after absorbing a $733 million one-time UK tax settlement payment.

Segment Results

Segment Adjusted EBITDA, FY 2022 vs. FY 2021

Segment	Adj. EBITDA FY 2022	Adj. EBITDA FY 2021	Change
Mobility	$3,299M	$1,596M	✅ +107%
Delivery	$551M	$(348)M	✅ first full-year profit
Freight	$0M	$(130)M	✅ reached breakeven

Mobility more than doubled Adjusted EBITDA for the year to $3,299 million, continuing the recovery-driven strength flagged since Q3 2021. Delivery posted its first full-year Adjusted EBITDA profit at $551 million, a $899 million swing from 2021's loss - confirming the segment's quarterly profitability (first hit in Q1 2022) compounded into a genuine full-year result rather than fading in weaker quarters. Freight reached breakeven for the year (from a $(130) million loss in 2021), helped by the Transplace acquisition completed in Q4 2021.

Beyond the Usual

Uber Paid $733 Million to Settle a UK VAT Dispute Dating Back Years

On October 31, 2022, Uber settled its UK VAT dispute with HMRC (the UK tax regulator) covering all periods before March 14, 2022, closing those periods to further assessment. Uber made a cash payment of approximately $733 million (GBP 613 million) during the fourth quarter to resolve the matter. Accrued legal, regulatory, and non-income-tax liabilities fell to $1,573 million at year-end 2022 from $2,187 million at year-end 2021 - the first material decline this site has tracked in this line, largely reflecting this settlement being paid down rather than an easing of Uber's broader legal/regulatory exposure (HMRC has separately indicated it is reviewing Uber's VAT filings for later periods, an open item worth watching). This is a different UK regulatory matter from the February 2021 Aslam worker-classification ruling that cost Uber a $600 million revenue accrual - both UK issues, but distinct legal questions (VAT treatment versus driver employment status).

Stock Price Since Last Quarter

Uber's stock was roughly flat to modestly positive through most of the fourth quarter before giving back gains in December: from a September 30, 2022 close of $26.50, up to $26.57 in October, up further to $29.14 in November, before falling back to $24.73 at the December 30, 2022 close - a decline of 7% for the quarter, reversing the prior quarter's 30% gain (see the Q3 2022 post). The stock finished 2022 down 41% for the full year, from $41.93 at the start of the year to $24.73 at year-end, even as full-year Adjusted EBITDA swung from a loss to a $1.7 billion profit and free cash flow turned positive for the first time - a continuation of the divergence between Uber's operating trajectory and its market pricing that this site has flagged since early 2022, driven by the broader growth-stock selloff rather than anything specific to Uber's own results.

Target Valuation Range

Undervalued. Uber traded at an EV/Revenue multiple of roughly 2.2x against FY2022 revenue as of year-end - a further compression from Q3 2022's ~2.5x, on the stock's fourth-quarter decline, and now well below FY2021's ~4.7x despite full-year Adjusted EBITDA swinging from a loss to a $1.7 billion profit over the same period.

With approximately 2,009,907,175 shares outstanding as of February 15, 2023 (per the 10-K's cover page) and a December 30, 2022 close of $24.73, Uber's market capitalization was approximately $49.7 billion. Against total liabilities of $23.61 billion and cash and cash equivalents of $4.21 billion, enterprise value was roughly $69.1 billion - down from the ~$71.7 billion calculated in the Q3 2022 post, reflecting the stock's fourth-quarter decline outweighing the modest growth in shares outstanding and total revenue.

	Dec 2022	Sep 2022
TTM Revenue	$31.9B	$29.0B
Enterprise Value	$69.1B	$71.7B
EV/Revenue	2.2x	2.5x

A full DCF still isn't attempted here, but the case keeps strengthening: 2022 was Uber's first full year of positive free cash flow, with Adjusted EBITDA positive and growing in all four quarters. This site continues to hold off pending a longer run confirming these aren't COVID-recovery-driven margins that fade as comparisons normalize - but the current ~2.2x EV/Revenue multiple, against a business that just closed its first cash-flow-positive fiscal year, is flagged here as a valuation gap worth revisiting again next quarter.

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