UBER Uber Confirms Its Operating-Profit Milestone With a Second Straight Positive Quarter

The Operating-Profit Milestone Holds for a Second Quarter

Last quarter's Q2 2023 post flagged Uber's first-ever GAAP operating profit ($326 million) as a milestone worth confirming before treating it as durable rather than a one-quarter event. This quarter answers that: income from operations was $394 million, up from $326 million in Q2 and versus a $(495) million loss a year ago - the second consecutive positive GAAP operating quarter in company history. Adjusted EBITDA reached $1,092 million, up 112% year-over-year, the seventh straight positive quarter and a new high, crossing the $1 billion mark for the first time. Nine-month free cash flow reached $2,594 million, up 274% from $693 million in the first nine months of 2022; standalone Q3 free cash flow was roughly $905 million (nine-month total less the $1,689 million already reported through H1 2023), itself a new single-quarter high for this site's coverage.

Net income attributable to Uber was $221 million, versus a $(1,206) million loss a year ago, despite the equity-stake mechanism turning unfavorable again this quarter: a $194 million unrealized loss on Aurora and a $97 million unrealized loss on the Joby Aviation stake, partly offset by a $132 million gain on Didi and a $59 million gain on Grab - a net loss of roughly $100 million across the four stakes. Unlike Q2 2023, this quarter's net income was not aided by the equity-stake swing; the profit came from operations. Mobility Adjusted EBITDA grew 43% to $1,287 million and Delivery Adjusted EBITDA grew 128% to $413 million, both new highs. Freight Adjusted EBITDA swung back to a loss, $(13) million from $1 million a year ago. The stock rose roughly 7% during the quarter, from $43.17 to $45.99, a fourth straight quarterly gain.

The Prescription

This quarter matters less for a new milestone and more for confirming an old one: GAAP operating income stayed positive for a second straight quarter, and this time without any help from a favorable equity-stake swing - in fact the equity stakes were a net drag of roughly $100 million this quarter, and operations still carried net income to a $221 million profit. That's a materially cleaner profit than Q2's, which leaned on a $386 million favorable stake swing. Readers should treat this quarter's result as the stronger evidence of the two that Uber's core business - not its portfolio of minority equity stakes - is now the source of its bottom line.

Freight's swing back to a loss after a single positive quarter (Q3 2022's brief $1 million profit was itself an exception in a chain of losses) is a reminder that the freight-brokerage macro cycle Uber has cited for over a year hasn't resolved. It remains the one segment where this site continues to flag caution rather than momentum.

Key Financial Metrics

Q3 2023 vs. Q3 2022 - consolidated, reported in USD

Metric	Q3 2023	Q3 2022	YoY
Revenue	$9,292M	$8,343M	✅ +11%
Adjusted EBITDA»	$1,092M	$516M	✅ +112%, seventh straight positive quarter
Income (Loss) from Operations	$394M	$(495)M	✅ second straight positive quarter, GAAP basis
Net Income (Loss) attributable to Uber	$221M	$(1,206)M	✅ swung to profit, despite a ~$100M net unrealized loss on equity stakes
Free Cash Flow (nine months)	$2,594M	$693M	✅ +274%

Balance sheet: Dec 2022 vs. Sep 2023

Balance sheet metric	Sep 2023	Dec 2022	Change
Cash and Cash Equivalents	$4,448M	$4,208M	✅ +6%
Total Assets	$35,949M	$32,109M	✅ +12%
Total Liabilities	$25,430M	$23,605M	roughly flat, up 8%
Long-term Debt, net of current	$9,252M	$9,265M	roughly flat
Goodwill	$8,140M	$8,263M	roughly flat

Total assets grew a further 12% since year-end, continuing the recovery flagged last quarter. Accrued legal, regulatory and non-income tax liabilities were roughly flat at $1,558 million (from $1,573 million at year-end).

Uber's GAAP operating profit held for a second straight quarter - $394 million, up from Q2's $326 million - this time without help from the equity-stake swing that boosted Q2's net income, evidence the milestone reflects the core business rather than a one-off.

Segment Results

Segment Adjusted EBITDA, Q3 2023 vs. Q3 2022

Segment	Adj. EBITDA Q3 2023	Adj. EBITDA Q3 2022	Change
Mobility	$1,287M	$898M	✅ +43%
Delivery	$413M	$181M	✅ +128%
Freight	$(13)M	$1M	⚠️ swung to a loss

Mobility and Delivery both set new quarterly highs for the second straight quarter. Freight posted its third loss in four quarters, continuing the macro-driven weakness flagged since Q1 2023.

Beyond the Usual

A Cleaner Profit Than Last Quarter's

Q2 2023's $394 million net income was aided by a $386 million favorable unrealized gain across Uber's equity stakes - without it, net income would have been roughly breakeven. This quarter's $221 million net income came despite the opposite: a combined $291 million of unrealized losses on Aurora ($194M) and the newly-tracked Joby stake ($97M), partly offset by $132M (Didi) and $59M (Grab) gains, netting to roughly a $100 million drag. With operating income of $394 million doing the real work this quarter, this is the cleaner of the two profitable quarters this site has now recorded for Uber.

Stock Price Since Last Quarter

Uber's stock rose intra-quarter, then pulled back but still finished higher: from a June 30, 2023 close of $43.17, up to $49.46 in July, down to $47.23 in August, and $45.99 at the September 29, 2023 close (the last trading day of the quarter) - a gain of roughly 7% for the quarter, a fourth straight quarterly gain following Q1 2023's 28% and Q2 2023's 36% rises.

Target Valuation Range

Fairly-valued. Uber traded at an EV/Revenue multiple of roughly 3.2x against TTM revenue as of this quarter's close - roughly flat with Q2 2023's ~3.1x, as trailing revenue grew alongside the stock's further gain.

With approximately 2,057,858,230 shares outstanding as of November 2, 2023 (per the 10-Q's cover page) and a September 29, 2023 close of $45.99, Uber's market capitalization was approximately $94.6 billion. Against total liabilities of $25.43 billion and cash and cash equivalents of $4.45 billion, enterprise value was roughly $115.6 billion - up from the ~$107.5 billion calculated in the 2023-06 post, on the stock's further gain and added liabilities. Against TTM revenue of roughly $36.0 billion (FY2022's $31,877 million, less nine-month 2022 revenue of $23,270 million, plus this quarter's nine-month 2023 total of $27,345 million), that implies an EV/Revenue^» of roughly 3.2x.

	Sep 2023	Jun 2023
TTM Revenue	$36.0B	$35.0B
Enterprise Value	$115.6B	$107.5B
EV/Revenue	3.2x	3.1x

The core investment case strengthens further this quarter: two consecutive positive GAAP operating quarters, seven consecutive positive Adjusted EBITDA quarters, and nine-month free cash flow up 274% year-over-year to $2.6 billion. This site continues to hold off on a full DCF, but the operating-profit case that was "worth revisiting" as of last quarter's post is now confirmed rather than speculative - the valuation multiple hasn't re-rated to reflect that yet, which is itself worth watching.

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