Uber reports positive cash flow for the first time

Uber has recorded its first-ever cash flow positive quarter, after burning through $25bn since being founded 13 years ago in its rush towards rapid global expansion.

The lossmaking Silicon Valley group, which has relied on heavily subsidised rides to shake up the taxi industry worldwide, said it generated free cash flow of $382mn in the three months to the end of June.

That is significantly higher than the $109mn analysts had been predicting, according to data from S&P Capital IQ. Free cash flow is defined as cash flow from operations minus capital expenditures.

“This marks a new phase for Uber, self-funding future growth with disciplined capital allocation, while maximising long-term returns for shareholders,” said Nelson Chai, the company’s chief financial officer.

Uber’s share price was up more than 17 per cent by Tuesday afternoon.

“It is the one thing that all investors were waiting for: for the company to finally hit free cash flow profitability and, more importantly, sustain it,” said Youssef Squali, an analyst with Truist Securities.

The company had said earlier this year it would rein in spending to meet the goal of reaching free cash flow positivity by the end of 2022.

This included reducing driver incentives and slowing corporate hiring, making it one of several tech companies to ease up on recruitment in response to the downturn in the value of tech stocks.

The company still posted a quarterly net loss of $2.6bn, $1.7bn of which was attributable to poorly performing investments, including its shares in self-driving vehicle company Aurora, Singapore-based app Grab and Indian delivery app Zomato.

Chai said Uber’s income would “see swings from quarter to quarter due to the large size of equity stakes on our balance sheet”.

“While we intend to monetise some of our stakes at an appropriate time, we have sufficient liquidity to give us the flexibility to maintain all of these positions, with the aim of maximising value for Uber and our shareholders,” he added.

The net loss was worse than Wall Street estimates, but Uber’s earnings comfortably beat analysts’ expectations on other measures.

Overall revenue was $8.1bn, up 105 per cent year on year, as the company benefited from people re-emerging from the pandemic. Analysts had been expecting revenues of $7.37bn.

There were 1.87bn trips taken on the platform in the second quarter, up 24 per cent year on year. The number of active users of Uber’s apps grew to 122mn worldwide, up 6 per cent from the previous quarter.

Revenues at the “mobility” ride-sharing business were up 120 per cent year on year, while revenues at Uber Eats, the company’s delivery arm, rose 37 per cent to $2.69bn.

Uber’s revenues benefited from a $983mn boost after business model changes in the UK related to the reclassification of drivers as “workers”. The change means total gross bookings in the country are counted as revenue. In most other markets, Uber counts only its cut from each fare as revenue.

Overall adjusted earnings before interest, taxes, depreciation and amortisation — Uber’s preferred measurement of profitability of its core businesses — came in at $364mn for the quarter, compared with a $509mn loss in 2021. The measure strips out certain expenses and non-recurring costs, such as discontinued operations and payments made to assist drivers during the pandemic.

Revenues at the company’s nascent freight arm, which handles long-distance trucking, rose to $1.8bn, boosted by its recent $2.25bn acquisition of shipping tech group Transplace. In June, Uber announced a partnership with Alphabet-owned Waymo to pilot autonomous trucking “at scale”.

“This is a work in progress,” said Squali from Truist Securities. “They’re benefiting from the recovery and in mobility, that’s their core. But the delivery business is showing some signs of softness.”

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