【2024.5】The largest parking platform in the world, the bottom has more than doubled! What do Uber reports look like?

After doubling in 2023, Uber's share price continued its upward momentum in 2024, rising more than 30% since the beginning of the year. The world's largest ride-hailing platform, as well as the second-largest takeout platform in the United States, has more than doubled in nearly two years from the bottom.

What is the driving force behind the rise in Uber's share price? We can try to find answers from their reports. We can focus on two key points: revenue growth and profitability improvement.

1. Revenue growth

Uber's revenue, which has doubled in the year after the pandemic, has begun to regress back to normal, maintaining double-digit gains each quarter, despite losing its prevalence, but gaining strength.

Specifically, Uber's revenue streams include ride-hailing services, takeaways, and freight services. Of these, hitchhiking and takeout are the most core revenue sources.

Both are platform-type businesses, and for platform-type businesses, their revenue can be broken down into two points: order amount and turnover rate. An increase in the order amount or an increase in the turnover rate can both drive revenue growth.

In terms of order volume, Uber's ride-hailing business has continued to grow at around 30% year-on-year in recent quarters, while order growth for the takeaway business has been modest, but growth accelerated to nearly 19% in 2023Q4. Overall, the two core ride-hailing and takeout businesses totaled about $363 billion in 2023Q4, an increase of 24% year-on-year, keeping pace with the previous quarter.

If you break down Uber's order amount further, it can be further broken down into three factors: the number of users ordered, how often the order is placed, and the customer's single price.

In terms of the number of users, Uber's monthly active users have seen good growth in recent quarters, with year-over-year growth of 14.5% in 2023Q3-Q4 and a new high for seven consecutive quarters, also a major driver of order growth.

Based on the frequency of orders placed by users, Uber has seen a slight decline in year-on-year growth in recent quarters, but growth has remained solid at around 17.3 times in 2023Q4, an 8% year-on-year growth, which is also a key driver of order growth. At the same time, Uber's average quarterly order volume has been growing for seven consecutive quarters, perhaps meaning that its user stickiness is getting better.

From a customer's single price point of view, Uber's data is a bit skewed. After experiencing strong growth in the second half of 2021, Uber's passenger single fare growth slowed in all quarters of 2022, and continued to decline year-on-year for four consecutive quarters since Q4 2022, dragging the back foot of order growth to some extent. In Q4 2023, Uber's single fare was $14, up 1% year-over-year, with a slight rebound.

Take a look at the breakdown of the order amount, and then look at Uber's order conversion rate. The so-called conversion rate is the rate at which the platform earns itself from the order amount, which can take the form of outsourcing or charging service fees, etc.

From the ride-hailing business, Uber's turnover rate is relatively high, approaching 30% overall, and has remained relatively stable at around 29% in recent quarters.

In terms of the takeaway business, Uber's churn rate rose above 20% for several consecutive quarters prior to 2023Q1, but fell sharply for two consecutive quarters in 2023Q2-Q3 and recorded 18.3% in 2023Q4, a slight rebound on the same basis.

From the ride-hailing and takeaway business overall, Uber currently has an overall turnover rate of about 23.8%, which remains around 24%.

In summary, for Uber's future revenue growth, we can focus on whether its monthly user and user order frequency will maintain good growth momentum, whether its customer unit pricing will continue to rebound, and whether its overall volatility level will remain stable.

2. Profitability improvement

Uber's big share price blowout over the past year, in addition to solid revenue growth, has come perhaps more from a dramatic improvement in profitability. Prior to the first half of 2021, Uber's single-quarter operating loss was often above $1 billion, but from Q3 2021, Uber's operating loss began to narrow to remain below $1 billion. In the last 3 quarters, Uber's operating profit has started to turn a profit and has continued to grow.

In general, a company's profitability improves, whether gross margin performance is good or expense rate control is good.

In terms of gross profit, Uber has not performed well in the last two years, falling from around 50% in 2021 to around 39% in 2023Q4, which is arguably dragging the back foot on profitability.

Uber's strong controls on rates offset the impact of falling gross margins. Uber's declining rates have been noticeable in recent years, driven by the scale of revenue growth and the company's own efforts to control costs.

For example, in terms of the most typical three-fee expenses, Uber's sales fee rate fell from 38% in Q1 2021 to 9.4% in 2023Q4, management fees decreased from 16% in 2021Q1 to 6.1% in 2023Q4, and R&D expenses decreased from 17.7% to 7.9% in the same period, and the overall decline in triple-fee expenses Up to nearly 50 percentage points was the main driver of profitability improvement.

Uber's operating profit margin has therefore risen steadily from -52.5% in 2021Q1 to 6.6% in 2023Q4, dropping the hat of losses and becoming a technology giant with continued profitability.

By business, Uber separately discloses EBITDA for each business segment, i.e. profit before interest tax depreciation and amortization.

Among Uber's two core businesses, the ride-hailing business has been a major contributor to profits, recording strong EBITDA since Q1 2021Q1 and has seen solid growth in recent quarters, hitting new highs every quarter.

The takeaway business has achieved positive EBITDA since 2021Q4. Although the current profit scale is far from that of the car business, it has grown very fast, almost doubling year-on-year growth in 2023Q4.

In future reports, we can see how EBITDA in Uber's two core businesses may not continue to grow at a rapid pace, driving operating margin growth and a further improvement in overall profitability.

Finally, to summarize,

For Uber's financial statements, we can focus on improvements in its revenue growth and profitability.

For revenue growth, we can focus on Uber's growth in order volume, including continued growth in monthly active users and order frequency, as well as whether customer unit pricing will continue its downward trend, and whether its overall conversion rate will remain stable.

For profitability, we can focus on the subsequent trend of gross margin, the control of expense rates, the continuity of EBITDA growth in the car and takeaway business, and the resulting improvement in operating margins.

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