In case you missed it:

Coupang & Cava reviews are coming tonight. Robinhood, Duolingo, The Trade Desk and a few other reviews will come later in the week.

The GAAP EBIT margin contraction isn’t concerning. It’s related to a telegraphed acceleration in targeted investments (more later) and a $479M legal charge. Ex-legal, EBIT margin would have been 11.8% for a new company record.

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They’re moving away from adjusted EBITDA. Hallelujah. They’ll start disclosing adjusted operating income, which will include stock comp as well as depreciation and non-M&A amortization. They’re also adding an adjusted EPS disclosure. I also love this. GAAP EPS is useless for Uber because of their equity portfolio. This will give us another useful metric to contemplate. None of this impacts their confidence in reiterating 3-year investor day targets.

Uber trades for 19x forward FCF & 21x forward EBITDA. FCF is set to grow by 33% this year (probably closer to 30% post-revisions) and 19% next year. EBITDA is expected to grow by 35% this year and by 27% next year. 2025 consensus EBITDA estimates are up 3% year-to-date.

“We're expecting more of the same strong performance in Q4… In fact, we hit a new record over Halloween weekend, this most recent Halloween, with more than 130 million trips across mobility and delivery generating more than $2 billion in gross bookings.” – CEO Dara Khosrowshahi 

6 Points of Strategic Focus in the Coming Years:

Leadership used most of their prepared remarks to lay out their 6 priorities for the business. These are the areas they believe will define success and strengthen their dominant market position.

First, they want to build deeper customer experiences or move “from trip to lifetime experience.” They yearn to create long-term customer loyalty through targeted investments that ensure the Uber experience is better than the field. Leadership is willing to take advantage of their best-in-class economies of scale, margins and balance sheet to sacrifice some near-term margin in exchange for a larger product lead and a longer runway. Uber One (where growth remained strong) will continue to be how they tie all of this incremental value together and extend the value prop. They’ve done very well there so far on the delivery side, and are now pushing hard to add more perks on the mobility side. Just 20% of their customers use both pillars and those that do deliver 3x spend levels (with 35% higher retention). The upside associated with driving that 20% higher is immense and they have proven ways to raise it via things like thoughtfully recommending a cup of coffee on a morning commute. It’s exciting to think about how much growth they have left within their existing user base while that user base also expands at a 15%+ Y/Y clip.

Next, as already announced, they’re looking to up-level fleet management capabilities. Their supply is shifting from individual drivers to large manned fleets in countries like Spain and Germany. And eventually autonomous fleets will grow to become a more meaningful part of supply. They’re hard at work on charging and storage infrastructure, fleet management and financing to be a more holistic, value-add partner for these companies. On top of maximum utilization rates, all of this will amplify its usefulness. They’re also building out data collection and labeling services (organically, via M&A & with Nvidia) to help these autonomous players train their models more effectively with high-fidelity physical data. That form of data is especially expensive to collect and Uber already has a mountain of it. Finally for this point, they’re upgrading algorithms with AVs in mind to add dynamic pickup point optimization, remote car unlocking and, generally speaking, improve how they mix and match consumers with vehicles.

Third, they want to expand from food delivery to local commerce and unlock a $10T global grocery and retail (G&R) market. Uber is off to a great start with capturing the larger opportunity, as it already has $12B in annual bookings growing at a rapid pace. Between adding more assortment, tightly integrating G&R into rides and building awareness through marketing, they’re determined to keep this growth engine rocking. For now, this means a “significant increase” in tech investments and is weighing on the pace of EBITDA margin expansion. Looking ahead, it should provide another lever for margin accretive growth.

Fourth, Uber wants drivers to do more for them. That entails motivating the base to service demand across multiple categories. It also includes Uber’s new digital task pilot, where drivers can get paid for help with data labeling for AI model training. They have many more plans to help these drivers earn more cash in new ways.

Fifth, they’re determined to be more of a strategic growth partner for their merchants. They’re getting more proactive in using partner feedback to improve products and services. Some of these improvements include faster onboarding, upgraded listing tools and helping them more easily enter new channels. This includes usage of its white label delivery service called Uber Direct. Additionally, scaling the advertising business and merchant-funded offers (spend +50% Y/Y) will remain key priorities within this topic. Relatedly, leadership views merchant choice as a must. They are quickly rounding out the partner roster, with Toast adding Uber as its preferred marketplace and as a default integration an encouraging example. They don’t want merchants to be forced to use their tools or anyone else’s as part of their Uber experiences. Dara and his team are passionate about empowering them with the flexibility and integrations to use exactly what they want.

And finally, GenAI will be a large part of Uber’s future roadmap. They have a massive base of data that can easily be unleashed to train powerful agents. Those agents will be able to nudge customers with data-driven up-sell recommendations to juice LTV and cross-selling. For example, imagine a world where Uber knows we love a good 7-Eleven Slurpee. If our courier has a 7-Eleven on their route to us, why not ask the customer if they’d like to add a stop? Happier user. Happier driver. Richer Uber. These are the kinds of win-win-wins that can stem from these investments.

They’ve been very candid about accelerating investments and accepting a slower pace of short-term margin expansion. The opportunity is too large to be optimizing for quarterly margin right now, especially with profitability and liquidity now in such healthy places. These investments are all currently playing out exactly as the team hoped they would. 

“Generative AI will make us more productive, our decision-making sharper, and our user experiences more intuitive and personal—embedding intelligence deeply into every part of Uber’s platform.” – CEO Dara Khosrowshahi 

Affordability & Demand:

Uber has also spoken a lot in recent quarters about wanting to foster better affordability with tools like “Wait and Save” (accept longer wait times for rides). Most of the products announced at this year’s GoGet event were with this in mind (shared rides, pre-set weekly pickup times and locations etc.), and the launches are working. Bookings growth accelerated because of these affordability initiatives and other product innovation like $15 Meal Deals on the delivery side. Trips growth was well ahead of expectations and faster than it has been in nearly 2 years. Accelerations were enjoyed in every Uber market. Monthly user growth was also a big beat, while engagement per customer rose by another 4% Y/Y. All of that happened while the average price fell 1% Y/Y, showing all of us how Uber can make lower prices make a ton of sense for its financial engine. Uber sees plenty of opportunity to keep creating better customer value through new products and also continued insurance disinflation relief. That relief is fully expected to continue in 2026 and contribute to more consumer pricing relief. 24% Y/Y driver supply should also help control surcharge rates for consumers, adding another source of price relief.

Nvidia Partnership & Autonomy:

The existing Nvidia partnership is meaningfully expanding. The two are working together to build autonomous vehicle fleets with partners like Stellantis. The relationship will start with 5,000 Level 4 AVs for Uber’s fleet and eventually scale to 100,000. These cars will use Nvidia’s driverless software platform & operating system. 

This marks a continuation of a recent trend of Uber taking direct ownership (partial or full) in autonomous fleets (Lucid & Avride the other recent equity stakes). And I love this approach. They have a beautiful balance sheet. They can spend on this, invest in the core business and buy back a ton of stock. No sacrifices needed. They are confident in their ability to sell these autonomous assets to 3rd parties down the road. They have world-class data and arguably the best AI compute partner on the planet for advancing autonomous fleet proliferation. Why not use the balance sheet to push the industry forward and show all of these autonomous vendors a proven business model for profitably operating? This news, to me, is Nvidia and Uber doing exactly that. The two are already together helping AV disrupters such as Avride, Momenta, May Mobility and so many more to market. A lot of those companies will be big pieces of creating these fleets.

This arrangement is expected to easily extend to other automakers too, which gives a lot more companies the partners and assets needed to actually compete in AVs. With this package of partners, automakers will be able to plug into Uber’s data, Nvidia’s world-class Hyperion 10 Platform, other AV partner integrations and financing all in one place. If that doesn’t speed things up I don’t know what will. A big risk of existing automakers reaching Level 4 autonomy was them having to do it all themselves. Now? They just need to keep building cars and let Uber + Nvidia take care of the rest.

And if they’re successful with all of this? Uber’s fleet gets much larger and diverse with a proven path to making these assets economically viable & optimally run. We also get more competition in the robotaxi space, which takes considerable power away from current leaders (Waymo/Tesla) and gives it to the demand aggregator that can maximize utilization… Uber. Waymo and Tesla can’t displace Uber unless they control large portions of the future market. All of this work makes that outcome less likely.

Nvidia & Uber also announced a new “robotaxi data factory.” This is probably why Uber is paying its drivers for labeling tasks. Uber will provide the highly relevant dataset for autonomous model training, and Nvidia will provide the world-class GPUs and physical AI models.

More on Autonomy:

Uber continues to enjoy faster growth in Austin and Atlanta, which are the cities where there are the most robo-taxis. As more of these unmanned vehicles are introduced, growth keeps accelerating. They’re not ready to conclude there’s a tight correlation here, but they are encouraged. Interestingly, driver earnings growth in these markets is also outpacing the overall company. This points to people and machines coexisting a bit better than people seem to think. Uber is also still delivering tangible utilization benefits for partners like Waymo.

More on Delivery:

G&R is driving cross-selling and also meaningfully contributing to new user growth. This is a big reason why delivery growth set a 4-year record this quarter. Furthermore, this business is now contributing profit positively, showing how Uber can quickly scale new offerings to expeditiously turn them into profit contributors. That’s why I have so much confidence in the heightened investments described above coming with good multi-year returns. 

The team was also asked about DoorDash expanding its Europe business through M&A. Uber rightfully called this inevitable, considering it's a $2T+ global market and DoorDash is a scaled player in it. They’re confident in maintaining a strong share, as they’ve been taking share from DoorDash in Australia, Japan and other markets in recent quarters. Uber’s European delivery market share rose to #1 in the UK and grew in Spain and Germany.

More Mobility:

Great quarter. Not good… great. The stock reaction does not change that at all in my mind. The margin weakness is very modest and entirely related to rising product and growth investments. They see massive opportunities where they’re enjoying rapid success. That success... not hope or guessing... is informing a sense of urgency to invest and support momentum. This is the right decision in my opinion... especially if the concession is accepting a slower pace of EBITDA margin expansion (not even contraction). I am so confident in them turning these costs into profitable growth in short order.

This company has masterfully rounded out its product suite and built a world-class consumer subscription that ties all of it together. Their leading consumer and driver scale both deliver a leading ability to pass savings onto stakeholders to drive loyalty, higher lifetime value and more profit dollars. This leadership also means an unmatched ability to optimize autonomous fleet utilization, which is how Uber will rationally pay every AV vendor more for their cars than the others can. That will fortify their dominant position amid this fluid transition. That's how I see things today. An emerging AV manufacturer monopoly (Google or Tesla) could make me less bullish, but that outcome looks less likely with every passing month.

At 19x forward FCF, I view this as one of the most compellingly priced market leaders on the planet. I see them growing revenue at a double-digit clip for a very long time and don’t think an AV shift will threaten that. If anything, it should be helpful. I was very close to adding today, but the cash pile is quite finite right now (7% of holdings) and the name is only a few % off of all-time highs. I'd likely be quick to accumulate into any incrementally material multiple compression.