Uber(US:UBER)2023-11-06 16:00PART I - FINANCIAL INFORMATION Item 1. Financial Statements This section presents Uber's unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2023, compared to the same periods in 2022, showing a significant turnaround to profitability in Q3 2023 with net income reaching $221 million and total assets growing to $35.9 billion Condensed Consolidated Balance Sheet Highlights (in millions) | Account | Dec 31, 2022 | Sep 30, 2023 | | :--- | :--- | :--- | | Total Current Assets | $9,249 | $10,679 | | Total Assets | $32,109 | $35,949 | | Total Current Liabilities | $8,853 | $9,405 | | Total Liabilities | $23,605 | $25,430 | | Total Equity | $8,074 | $10,125 | Condensed Consolidated Statement of Operations Highlights (in millions) | Metric | Q3 2022 | Q3 2023 | 9 Months 2022 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $8,343 | $9,292 | $23,270 | $27,345 | | Income (Loss) from Operations | $(495) | $394 | $(1,690) | $458 | | Net Income (Loss) Attributable to Uber | $(1,206) | $221 | $(9,736) | $458 | Condensed Consolidated Statement of Cash Flows Highlights (in millions) | Metric | 9 Months 2022 | 9 Months 2023 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | $886 | $2,762 | | Net Cash Provided by (Used in) Investing Activities | $132 | $(2,407) | | Net Cash Provided by (Used in) Financing Activities | $104 | $(141) | Notes to Condensed Consolidated Financial Statements The notes provide detailed disclosures supporting the financial statements, including revenue recognition, segment performance, and significant legal and tax contingencies Revenue by Segment (in millions) | Segment | Q3 2022 | Q3 2023 | 9 Months 2022 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- | | Mobility | $3,822 | $5,071 | $9,893 | $14,295 | | Delivery | $2,770 | $2,935 | $7,970 | $9,085 | | Freight | $1,751 | $1,286 | $5,407 | $3,965 | | Total Revenue | $8,343 | $9,292 | $23,270 | $27,345 | Segment Adjusted EBITDA (in millions) | Segment | Q3 2022 | Q3 2023 | 9 Months 2022 | 9 Months 2023 | | :--- | :--- | :--- | :--- | :--- |\n| Mobility | $898 | $1,287 | $2,287 | $3,517 | | Delivery | $181 | $413 | $310 | $1,030 | | Freight | $1 | $(13) | $8 | $(50) | - The company is challenging a VAT assessment from UK tax authorities (HMRC) totaling £493 million (approx. $622 million), which was paid in Q3 2023 to proceed with an appeal. The payment is recorded as a receivable as management believes the appeal will be successful164165 - Legal challenges to driver classification as independent contractors are ongoing. The California Supreme Court granted a review of a lower court's decision that upheld Proposition 22, with a decision expected in 2024. Similar lawsuits are active in Massachusetts and Switzerland144145149 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance for Q3 2023, highlighting a 15% YoY increase in Monthly Active Platform Consumers (MAPCs) to 142 million and a 21% rise in Gross Bookings to $35.3 billion, alongside achieving net income of $221 million and Adjusted EBITDA of $1.1 billion Q3 2023 Key Financial and Operational Highlights (YoY % Change) | Metric | Q3 2022 | Q3 2023 | % Change | | :--- | :--- | :--- | :--- | | Monthly Active Platform Consumers (MAPCs) | 124 million | 142 million | 15% | | Trips | 1,953 million | 2,441 million | 25% | | Gross Bookings | $29,119 million | $35,281 million | 21% | | Revenue | $8,343 million | $9,292 million | 11% | | Adjusted EBITDA | $516 million | $1,092 million | 112% | - The California Supreme Court's review of Proposition 22's constitutionality remains a key focus, with a decision expected in 2024. Management notes that an adverse ruling requiring driver reclassification would significantly increase expenses195197 - Net cash from operating activities for the first nine months of 2023 was $2.8 billion, which included a cash outflow of approximately $622 million for a disputed UK VAT assessment293296 Results of Operations This subsection provides a detailed analysis of the consolidated statement of operations, showing Q3 2023 revenue increased 11% YoY to $9.3 billion, driven by a 21% increase in Gross Bookings, and achieving income from operations of $394 million - Sales and marketing expenses decreased by $212 million (18%) in Q3 2023 compared to Q3 2022, primarily due to business model changes that reclassified $521 million of consumer promotions as contra-revenue235 - General and administrative expenses decreased by $262 million (29%) in Q3 2023, mainly due to a $188 million reduction in legal settlements and related expenses241 - Other Income (Expense), net, improved from a $535 million expense in Q3 2022 to a $52 million expense in Q3 2023. This was largely due to smaller unrealized losses on equity securities, which were a $96 million loss in Q3 2023 versus a $550 million loss in Q3 2022249250251 Segment Results This subsection analyzes the performance of Uber's three segments, showing strong growth in Mobility and Delivery, contrasted with a decline in the Freight segment due to a challenging market Q3 2023 Segment Performance vs. Q3 2022 (in millions) | Segment | Revenue | Revenue % Change | Adjusted EBITDA | Adjusted EBITDA % Change | | :--- | :--- | :--- | :--- | :--- | | Mobility | $5,071 | 33% | $1,287 | 43% | | Delivery | $2,935 | 6% | $413 | 128% | | Freight | $1,286 | (27)% | $(13) | N/M | Liquidity and Capital Resources As of September 30, 2023, Uber had $4.4 billion in cash and cash equivalents, with net cash from operating activities significantly increasing to $2.8 billion for the first nine months of 2023, despite a $622 million payment for a disputed UK VAT assessment - Net cash provided by operating activities was $2.8 billion for the nine months ended Sep 30, 2023, compared to $886 million for the same period in 2022295296 - Net cash used in investing activities was $2.4 billion, primarily due to $5.9 billion in purchases of marketable securities, partially offset by $3.0 billion in proceeds from sales and maturities298 - The company paid approximately $622 million (£493 million) to UK tax authorities (HMRC) for a disputed VAT assessment, which decreased operating cash flow but is recorded as a receivable pending appeal304 Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details Uber's primary market risk exposures, including interest rate fluctuations on its floating-rate debt, investment volatility from its $9.1 billion in equity investments, and foreign currency risk from extensive international operations - A hypothetical 100 basis point increase in interest rates would decrease the fair value of the company's fixed-rate notes by $196 million as of September 30, 2023310 - The company holds $9.1 billion in investments as of September 30, 2023, including in privately-held and public companies, which exposes it to equity price risk and potential volatility in net income314 - Uber is exposed to foreign currency risk as it transacts business globally. This risk is partially mitigated because revenues and expenses are often in the same local currencies315 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2023, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of September 30, 2023, the company's disclosure controls and procedures are effective at a reasonable assurance level317 - There were no material changes to internal control over financial reporting during the third quarter of 2023318 PART II - OTHER INFORMATION Item 1. Legal Proceedings This section incorporates by reference detailed legal proceedings from Note 12, covering driver classification and tax matters, and discloses other material proceedings such as class action lawsuits in Australia filed by taxi and hire-car industry participants - The company references Note 12 for details on material legal contingencies, including those related to Driver Classification and State Unemployment Taxes322326 - A class action lawsuit has been filed in Australia by taxi and hire-car industry participants, alleging that Uber's operations from 2014 to 2017 were unlawful and caused financial damages. A trial is scheduled for March 2024324 Item 1A. Risk Factors This section provides a comprehensive overview of significant risks, including potential driver reclassification, intense competition, a history of significant financial losses, dependence on user retention, security breaches, and a complex global regulatory landscape - The classification of drivers as independent contractors remains a primary risk, with ongoing legal challenges in the U.S. and abroad. An adverse outcome could force a fundamental change to the business model and significantly increase operating expenses329334 - The company operates in highly competitive industries with low barriers to entry and faces pressure to offer incentives and promotions, which has adversely affected and may continue to affect financial performance338344 - The company has a history of significant losses ($32.3 billion accumulated deficit as of Sep 30, 2023) and may not achieve or maintain profitability as it continues to invest in growth and new offerings347 - The business is exposed to security and data privacy breaches, such as the 2016 incident affecting 57 million users. Future incidents could result in significant liability, regulatory scrutiny, and reputational harm397399 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section discloses a minor unregistered sale of equity in July 2023, where the company issued 37 shares of common stock upon the conversion of Careem Convertible Notes, exempt from registration under Regulation S - In July 2023, Uber issued 37 shares of common stock upon the conversion of Careem Convertible Notes at a price of $55 per share. The sale was exempt from registration under Regulation S516 Item 5. Other Information This section reports that on August 24, 2023, CFO Nelson Chai entered into a pre-arranged Rule 10b5-1 stock trading plan for the potential sale of up to 200,000 shares of Uber common stock between November 2023 and August 2024 - CFO Nelson Chai entered into a Rule 10b5-1 trading plan on August 24, 2023, for the potential sale of up to 200,000 shares of common stock517 Item 6. Exhibits This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including corporate governance documents and required certifications from the Principal Executive and Financial Officers - The Exhibit Index lists all documents filed with the report, including required CEO and CFO certifications under Sarbanes-Oxley Sections 302 and 906518520 Signatures The report is formally signed and authorized by the company's principal executive and financial officers - The Form 10-Q was signed on November 7, 2023, by Dara Khosrowshahi, Chief Executive Officer, and Nelson Chai, Chief Financial Officer526