Uber Technologies (UBER 0.07%) posted its fourth-quarter report on Feb. 8. The ride-hailing and food delivery company's revenue rose 49% year over year to $8.6 billion, which beat analysts' estimates by $90 million.
Its net income fell 33% to $595 million, or $0.29 per share, but cleared the consensus forecast by $0.45. But excluding a $756 million pre-tax benefit from its unrealized investment gains, Uber would have posted a net loss.
Image source: Uber.
On the bright side, Uber's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) -- which excludes its investments, divestments, stock-based compensation, and other one-time expenses -- surged 673% year over year to $665 million. As a percentage of its gross bookings, Uber's adjusted EBITDA margin expanded from 0.3% to 2.2%.
For the full year, Uber's revenue rose 83% to $31.9 billion and its adjusted EBITDA improved from a loss of $774 million to a profit of $1.7 billion. Those growth rates are impressive, but Uber's stock still trades nearly 25% below its IPO price of $45 from May 2019. Should investors buy some shares right now and bet on a strong recovery over the next 12 months?
NYSE: UBER
Key Data Points
How fast is Uber growing?
Uber's monthly active platform customers increased 11% year over year to 131 million in the fourth quarter, but that represented a slowdown from its previous quarters. Its total number of trips rose 19% to 2.1 billion across both its mobility and delivery platforms, but that merely matched its growth rate in the previous quarter. As a result, its growth in gross bookings (the total value of all services booked through its platform) cooled.
|
Metric |
Q4 2021 |
Q1 2022 |
Q2 2022 |
Q3 2022 |
Q4 2022 |
|---|---|---|---|---|---|
|
MAPCs Growth (YOY) |
27% |
17% |
21% |
14% |
11% |
|
Trips Growth (YOY) |
23% |
18% |
24% |
19% |
19% |
|
Gross Bookings Growth (YOY) |
51% |
35% |
33% |
26% |
19% |
Data source: Uber. Year-over-year growth.
That slowdown was caused by tough comparisons to the post-pandemic recovery of its mobility business in 2021 and persistent currency headwinds. But in the first quarter, Uber expects its gross bookings to rise 17% to 21% year over year on a reported basis and 20% to 24% on a constant currency basis, which implies its growth could stabilize throughout 2023.
Meanwhile, Uber's take rate, or the percentage of its bookings which it retains as revenue, rose year over year across the mobility and delivery segments in the fourth quarter. That's why its revenue growth consistently outpaced its bookings growth over the past year.
|
Metric |
Q4 2021 |
Q1 2022 |
Q2 2022 |
Q3 2022 |
Q4 2022 |
|---|---|---|---|---|---|
|
Take Rate (Mobility) |
20.1% |
23.5% |
26.6% |
27.9% |
27.8% |
|
Take Rate (Delivery) |
18% |
18.1% |
19.4% |
20.2% |
20.5% |
|
Total Revenue Growth (YOY) |
83% |
136% |
105% |
72% |
49% |
Data source: Uber. Year-over-year growth.
A rising take rate implies that Uber's pricing power is improving, economies of scale are kicking in, and its margins will continue to expand. As a result, Uber expects its adjusted EBITDA to rise from $168 million in the first quarter of 2022 to between $660 million and $700 million in the first quarter of 2023. As a percentage of its gross bookings, its adjusted EBITDA margin would expand from 0.6% to 2.2% (based on the midpoint of its bookings estimate).
By comparison, Uber's smaller competitor Lyft (LYFT +1.50%) expects its revenue to rise just 11% year over year in the first quarter as its adjusted EBITDA plummets 73% to 91%. It blamed that slowdown on a seasonal decline in bike and scooter rentals, a reduction in its base prices to stay competitive, and a reduced usage of surge pricing as it finally resolves its ongoing shortage of drivers. Meanwhile, Uber's total number of drivers rose 35% year over year in the fourth quarter, and it didn't seem to struggle as much as Lyft with driver shortages throughout the year.
What will happen to Uber in 2023?
Looking ahead, Uber plans to expand its Uber One subscription service, which nearly doubled its membership to 12 million in 2022, and to finally turn profitable on a generally accepted accounting principles (GAAP) basis this year as it cuts costs and streamlines its business.
Analysts expect Uber's revenue and adjusted EBITDA to rise 16% and 88%, respectively, for the full year. Based on those expectations, its stock still looks cheap at less than 2 times this year's sales and 21 times its adjusted EBITDA. Lyft might seem cheaper at less than 1 times this year's sales and 8 times its adjusted EBITDA, but it's growing much slower.
Therefore, I believe Uber's stock will go higher this year once the bear market finally ends. Its bookings and revenue are rising, its margins are expanding, and it's still undervalued relative to its long-term prospects.
