The question of whether Uber would be able to self-support was at least partially answered Tuesday with the company’s second quarter earnings report.
In its Q2 digest, the American ride-hailing and food delivery giant reported positive free cash flow, indicating that it can now self-fund, putting to rest — at least in today’s market — lingering concerns that it would one day run out of cash.
The former unicorn and present-day public company traded sharply higher in pre-market trading after reporting its second-quarter financial performance. Shares are now up 14.4% as of 10:30 a.m. EDT.
That Uber was able to generate free cash flow in the second quarter should not be entirely surprising; the company’s first quarter numbers included positive operating cash flow and sharply less negative free cash flow. Operating cash flow indicates how much a business’s operations consumed, or generated cash, while free cash flow is the same metric, less capital expenses.
Free cash flow is not profitability in traditional terms, as other expenses, including the non-cash cost of share-based employee compensation and changes in the value of equity investments, come into play.
Uber was unprofitable in net income terms in the second quarter. Still, positive free cash flow and other signs of health were more than enough to put wind in Uber’s sails — gas in its tank? electrons in its battery?
Let’s talk about the results.
Uber’s second quarter
In the three months ending June 30, Uber’s gross bookings — the value of all commerce executed on its platform — rose 33% to $29.1 billion from $21.9 billion in the year-ago Q2. From that total volume, Uber generated revenues of $8.1 billion, up 105% from its year-ago revenues of $3.9 billion in the same period.
The company’s revenue growth was impacted, the company notes, by “a change in the business model for our U.K. Mobility business and the acquisition of Transplace by Uber Freight,” so we should read the percentage-growth figure for Uber’s top line with a grain of salt.
Regardless, the company’s gross bookings expansion and resulting revenue lift provided operating leverage. Uber’s adjusted EBITDA rose from -$509 million in Q2 2021 to $364 million in Q2 2022. Similarly, Uber’s free cash flow rose from -$398 million in the year-ago quarter to $382 million in the second quarter of 2022.
Ride-hailing vs. delivery
Notably Uber’s growth engine has once again flipped. Before the pandemic, Uber’s ride-hailing business was its leading unit. However, during early COVID-19-impacted quarters, Uber’s food delivery business took over as its growth driver.
Now with the pandemic waning in economic terms, the company’s expansion driver has once again changed hands, with ride-hailing gross bookings rising 120% in the second quarter on a year-over-year basis, and its food delivery gross bookings rising a more modest 7%.
Delivery still hung on as the unit leader, in terms of gross bookings, a smidge ahead of ride-hailing and far beyond its Freight …read more