Uber reported $382 million in free cash flow for the first time ever, an indication that the rideshare company’s “serious” efforts to curb costs are paying off, even in the midst of a cold economy.
Uber is still burning a lot of money but it’s mostly in the area of its investments in other start-ups. The company reported record revenue of $8.1 billion in the second quarter of 2022, an increase of 105 percent compared to the same quarter last year. It said it lost $2.6 billion, mostly due to its equity stake in Aurora, Grab and Zomato. Additionally, it lost $470 million in stock-based compensation. (Uber is considering selling its stake in Indian delivery startup Zomato, Reuters reports, in another move to streamline its balance sheet.)
But overall, Uber has exceeded expectations, thanks mostly to growth in the ride-sharing and delivery business. Gross bookings, or the total payments customers make to Uber before paying drivers and other fees or discounts, rose 33 percent year-over-year to $29.1 billion. Of that, mobility accounts for $13.4 billion while delivery disruptions account for $13.9 billion.
People took more Uber rides this quarter, 1.87 billion to be exact, or 21 million rides per day. This represents a 24 percent increase in the number of trips year-over-year.
But the positive cash flow, which indicates that Uber is now making more money from its business operations than it is losing, is frosting for Dara Khosrowshahi, the company’s CEO, who pledged earlier this year that Uber would need to get “hardcore about costs.” .
“In the last quarter, I challenged our team to meet our profitability commitments faster than planned — and they did,” Khosrowshahi said in a statement.
Wedbush’s Dan Ives said in a research note, the findings indicate “Uber’s ability to generate profits while weathering inflationary pressures and pockets of driver shortages that persist in some cities.”
Knowing that profitability in the traditional sense may remain elusive for the company, Khosrowshahi instead set the goal of achieving profitability based on free cash flow rather than adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), noting that this is what institutional investors expected of the company .
Uber has long been criticized for the way it calculates its adjusted earnings. The company’s definition of EBITDA includes an unusually large list of exceptions and is widely seen as an inaccurate measure of a company’s overall profitability.
There is still a lot of uncertainty about Uber’s business, including legal disputes over how the company classifies its drivers. A Massachusetts judge recently struck down a ballot measure that was backed by Uber and Lyft to enshrine the classification of passenger car drivers as independent contractors.
However, the company appears to be doing a better job of adding new drivers to the platform, reporting that it now has 5 million drivers globally, or a 31 percent increase year-over-year. Earlier this year, a national driver shortage forced Uber to spend more on driver incentives and caused its inventory to collapse. The company said last week that it would start letting drivers see fares in advance before accepting ride requests.
Uber stock is trading up 15 percent since the market opened.
Updated Aug 2nd at 11:13AM ET: Updated to include news that Uber is considering selling its stake in Zomato.