“We believe we remain undervalued despite these strong fundamentals, and plan to be active and opportunistic buyers of our stock… we remain on track to steadily reduce our share count.”

CFO Prashanth Mahendra-Rajah

“Over the coming years, we plan to be opportunistic and monetize our $8.5B in equity stakes in a judicious manner to maximize the long-term value for Uber and our shareholders. We will utilize those proceeds in line with our capital allocation priorities.”

CFO Prashanth Mahendra-Rajah

Bookings guidance missed by 1.5% due to FX. The FX headwind is incrementally larger by $1 billion Q/Q and the 5.5 point headwind is larger than expected. This was the main source of the miss. Additionally, LA wildfires and winter storms in the South led to some markets shutting down for a few days this quarter. That reduced bookings growth guidance by another “one to two points.” Without these headwinds, Uber would have comfortably beat estimates. Because of the lack of impact on profit from FX swings, it wants investors to focus on FXN growth. This guidance calls for 19% FXN growth overall, which is slower than 21% growth this quarter. Again, that’s related to a larger FX headwind and extreme weather. Without this, Q/Q FXN growth would have been roughly stable.

EBITDA guidance met estimates. It also expects $1.8 billion in stock compensation and $650 million in depreciation expenses in 2025.

Uber trades for about 18x 2025 FCF. FCF is expected to compound at a 24% clip for the next two years. It also trades for 21x 2025 EPS (excluding tax items and equity valuations in the GAAP number). EPS is expected to compound at a 32% clip for the next two years. Uber reiterated its 3-year targets on the call. FCF estimates should rise following this report. EPS estimates should be rather stable.

Uber’s View as AVs Proliferate

“Naturally, investors are debating whether AVs pose a risk or present a massive opportunity for Uber. Based on our deep engagement with AV technology developers, auto OEMs and other experts and technologists in the ecosystem, I am more confident than ever that Uber is uniquely positioned to capture the $1 trillion opportunity that autonomy will unlock in the US alone.”

CEO Dara Khosrowshahi

Uber again spoke very positively about the world shifting to autonomous vehicles (AVs) and its positioning within that. Much of its optimism stems from the highly variable ride-sharing demand among cities across the globe. Autonomous vehicle fleets are extremely expensive to build out and moving from regulatory approval to commercialization will take years. Costs will come down over time, but that will be a process. Dara sees AV volume rising to 10%-15% of Uber’s total volume over the next 5 years. Again… this will not be immediate as obstacles like cost bottlenecks remain. Currently, just operating the hardware and managing the AV fleet costs $2 per mile on average, which is the same as it takes to run Uber’s whole business. This $2 for AV vendors doesn’t include all Uber spends on demand generation, incentives, customer service, legal compliance and G&A. So? Simply put, on an apples-to-apples relative basis, AVs are still very expensive. Uber wants them to get cheaper, as it thinks this will unlock a much larger TAM.

With this dynamic in mind, fleet operators will have a difficult decision to make for the foreseeable future. They can either build to meet peak capacity or build for lower volume times. Building for peak capacity today means up to 95% of fleets will be wasted during non-peak times. It will lead to AV fleets resembling cash incinerators. And demand seasonality will also mean consistent waste from March to the fall, as ride volume naturally falls annually throughout that period. If vendors choose to under-build and operate on their own, that will lead to unacceptable service and wait times during the most important part of the day.

“I think on autonomous, we think we are very, very well positioned. We're investing aggressively across all parts of the portfolio.”

CEO Dara Khosrowshahi

So what should these AV vendors do? Partner with Uber. Uber’s massive and growing base of drivers is the perfect complement to this expensive hardware. It’s how companies can more gradually build capacity, ramp revenue and minimize cash burn, without delivering a poor end product. Considering the AV transition will take a very long time, this is by far their best option. They get to balance growth with more sustainable margin, while plugging into Uber’s massive base of consumers to materially uplift car utilization rates. More data on this later.

The second large piece of its perceived value proposition that I find real is its years and years of fleet management operations experience. As Dara reminded us, autonomous cars will end up traveling about 7x-10x more miles per year than a manned vehicle. These cars will need places to charge and park for storage. Uber is investing aggressively in warehouse capacity equipped with hefty electricity and compute required to maintain these expensive assets. While these are somewhat incremental costs, it doesn’t expect this to impact its 3-year financial targets in the slightest. 

These fleets will need to be constantly cleaned and maintained by mechanics. Who better to do that than Uber and its 50,000 fleet operation partners? AV vendors will need to make sure movement is as efficient as possible. Uber is best-positioned with its hyper-seasoned routing algorithms to make that happen. Vendors will need to seamlessly handle chargebacks, insurance claims, lost items and more tedious services that Uber has painstakingly built through tedious trial and error. AV partners will not need to learn… they’ll just need to use Uber to shrink that learning curve to zero. Per Dara, “Uber can deliver the lowest operational costs for AV partners because it is leaps and bounds ahead on every aspect of go-to-market and commercialization.”

Uber also thinks it can help with vehicle safety and regulatory compliance. While there’s likely some legitimacy to that, these first two items are really how I think Uber can find defensible and large market share in the AV revolution. 

Evidence of Uber’s AV Value & Durable Growth Beyond the AV Revolution:

It’s nice to hear how confident Uber is in the future, but they have a direct incentive to be optimistic. They want their company to thrive and their share price to go higher. I prefer when optimism is backed by actual data. While it’s very early in Waymo’s expansion to cities like Phoenix, Uber has delivered a direct ability to “drive significantly higher utilization than any first-party network could. That remains the case today. It expects Uber/Waymo launches in Austin and Atlanta to deliver more convincing proof of concept. There will be lots of business model toying and experimentation. Not all of that will include Uber. Over time, it’s these pieces of evidence that will all but force AV vendors to opt into this demand aggregator.

AVs are Just Another Supply Problem to Solve:

Time and time again, Uber has demonstrated that it can build vast supply bases to service unmatched demand. Whether that was UberX, UberEats, grocery or anything else, it’s able to organize a massive two-sided marketplace with precision and efficiency. It thinks the AV challenge is similar to these other critical supply mass challenges. And thinks it will be able to easily build supply, thanks to its overarching value prop. While this won’t be its main long-term approach, it is willing to buy some fleets outright to get this supply base quickly growing.

AV Bullishness Depends on a Competitive Market for AV Hardware:

As a reminder, this bullish point of view from me relies on there being many AV players rather than Waymo or Tesla controlling most of the market. If that happens, I think Uber’s positioning becomes a lot more uncertain. Fortunately, many, many vendors are at or racing towards commercial L4 Autonomy, with Zoox, Tesla, May Mobility and more expected to join the fold soon. And furthermore, Tesla, who some perceive to be the current leader, just had its popular Morgan Stanley bull delay robotaxi scaling assumptions by a few years. That gives everyone else time to catch up, while, again, the current actual leader (Waymo in my mind) is a close Uber partner. Furthermore, as previously noted, moving from product to commercial deployment will take “years.” Navigating a web of regulations and go-to-market challenges (which Uber alleviates) will take time, and that will allow many, many players to eventually join the fold. That is how Dara and Uber see the market evolving, and if they’re right, Uber should do extremely well.

“By the time all five of these entities come together… I think you're going to have a number of players getting to prime time both in the US and internationally. I think that's great for the ecosystem.”

CEO Dara Khosrowshahi

“Even though autonomous vehicle hardware capacity remains a [cost] bottleneck to commercialization, we believe that in the long run, autonomy will be an enabling technology and all new vehicles will be sold with L4-capable software. In that world, vehicle supply will gravitate toward Uber’s high-utilization network, much like the nearly 17 million drivers and couriers who took a trip on our platform in 2024.”

CEO Dara Khosrowshahi

2025 Priorities Aside from its AV Program:

Aside from ingraining itself in the AV universe, Uber wants 2025 to be a year where its products become more affordable. It thinks this can unlock larger customer demographics and wants to make that happen. Its lower cost UberX share product crossed $2 billion in annualized volume in just two years and it added this to 10 more airports, with more plans for expansion. Its popular Uber Shuttle launch also expanded to LaGuardia Airport. Aside from these items, it expects more favorable inflation dynamics in 2025 vs. the past few years. Notably, labor supply has improved while gas and used car inflation are both quickly cooling. That savings will be partially passed onto consumers. Insurance costs have been a primary concern for Uber’s margins and its affordability. Through “strong policy work” it thinks it will control a lot of this inflation and keep it under 10% Y/Y. That’s actually better than feared and directly translates to lower product cost inflation. 

Another focus area will be “unlocking lower-density markets” outside of tier 1 cities. It’s pushing to add more merchant choice (like Home Depot, Wegmans and Albertsons this quarter) for Eats customers and continues to build on its Instacart partnership for grocery delivery specifically. It sees a real opportunity to expand to less densely-populated areas outside of the USA in countries where it’s already the market share leader. So far so good, with “active eaters, merchants and orders in low-density markets growing multiples faster than high-density.”

Aside from this, continued proliferation of its growth bets portfolio will remain a priority, with that segment crossing $26 billion in annual volume at a 55% Y/Y growth clip. Lastly, a maniacal focus on cost discipline and margins will continue. 

More on Mobility:

Driver supply continues to be in great shape, which is closely related to its objective of controlling consumer costs. More supply means lower surge pricing and costs overall. This quarter, driver growth continued to outpace revenue, with 26% Y/Y expansion. This supply dynamic should remain favorable, as drivers and couriers enjoyed 22% FXN earnings growth (16% growth overall) Y/Y.

Delivery:

Delivery outperformed via a “step change in member adoption and preference for its grocery and retail products.” Both of those newer segments are driving material incremental engagement. Impressively, this was its 7th straight quarter for delivery active user growth acceleration. This helped it take incremental market share in all ten of its largest markets. Sticking with the 2025 theme of affordability, merchant-funded offers (fund a discount for an ad placement) rose more than 60% Y/Y to cross $1 billion in rewards. Uber also added more pickup options for those not wanting to pay for delivery. 

Just like for mobility, courier and merchant supply drives demand. Merchants on the platform rose 16% Y/Y and sales per merchant also rose. It only has about 1/3 of the top merchants in its largest markets, so the runway remains quite long. More choices directly lead to more conversion and volume. During the quarter, it added a new “pick and pack” feature for people who only want to grab things in grocery stores, without delivering. They can simply fill carts and hand them off to the courier. Both of these items should augment strong supply growth.

Uber Direct, which offers white-label delivery for partners, deepened its Toast partnership to handle more of their delivery volume throughput. It also added P.F. Chang’s, Burger King in the UK and its first Uber Direct customer in Poland (Media Markt). For merchants who want to have their own employees fulfill deliveries and rides for the company, Uber opened up its app interface to let them tap into the “same fulfillment technology as Uber earners.”

Uber One:

This was a banner quarter for Uber One, with 60% Y/Y growth in membership and 20% Q/Q growth to reach 30 million. It added more travel and commute perks like priority pickup from airports and inked a new partnership with Delta to plug that loyalty program into Uber.

Uber One is where the company separates itself from the pack. It’s where Uber combines its unmatched suite of products, while driving use case awareness and adoption. That’s helping Uber foster multi-product adoption and a coinciding 3x spend uplift vs. single product users. 37% of total Uber consumers now use 2+ products. Relatedly, trips per active set a new all-time high this quarter at 6.

Uber One is also where the company finds its best retention and customer engagement, which allows it to offer special pricing and promotions to keep the product unique and the demand flywheel humming. It’s how Uber raises its revenue quality and visibility. Simply put, Uber One creates more lucrative customers and therefore allows Uber to more profitably control consumer pricing… thanks to the relative acquisition cost advantage it enjoys over everyone else.

More:

Uber is executing at a fundamentally elite level and getting very little credit for it from Mr. Market. Brisk growth at giant scale and increasingly compelling margin. The working capital dynamics are also fantastic here and the balance sheet is rapidly turning into a company strength. Pessimism has nothing to do with Uber’s results. It has everything to do with the perceived AV positioning risk. As I hear Dara and industry pundits talk about Uber’s value proposition more, I get increasingly more confident in this firm being the demand aggregator rather than the dinosaur. It does provide a lot of value in terms of utilization uplift and I think tests in Austin and Atlanta will clearly reiterate that.

If they are that demand aggregator, this can be a much, much larger company in the future than it is today. Using anecdotes like Waymo test markets, its budding partner network and delays to AV scaling assumptions, I’m incrementally more positive on this name following the report. I’m incrementally more optimistic in this sector having many capable competitors and them all needing to plug into Uber to maximize financial success. That’s why I boosted my stake by 20%+ earlier today.