Record: Plus 70 percent of Uber One memberships (Photo: freepik)
Uber has established itself as a leading player in the global mobility and delivery services market, benefiting from strong positioning, diversified revenue structure and strategic partnerships in the autonomous vehicle space. Its impressive financial performance and market dominance offer long-term growth potential.
But there are always regulatory risks and the danger of increasing competitive pressure. What opportunities and risks arise with an investment in Uber?
Uber has numerous sources of income
Above has cleverly diversified across different revenue streams over the years. In addition to classic ride-hailing, which includes options such as standard rides, shared rides and luxury rides, Uber also offers the food delivery service Uber Eats. In some regions, Uber is also active in vehicle rental, often in collaboration with traditional providers.
Another offer from Uber in selected cities is the rental of bicycles and e-scooters. The advertising business is also very lucrative. Uber Ads market advertising space in the app, on vehicles and inside the vehicles. In addition, Uber generates regular revenue through subscriptions such as Uber One for long-term users and Uber for Business.
Uber as market leader with increasing cash flows
Over the last few years, Uber has become the market leader in virtually all transportation sectors. The platform benefits from technological maturity and the network effect.
While Uber still struggled to become profitable in 2022, cash flow growth has increased by triple digits in recent quarters, while stock-based compensation has, encouragingly, declined. The free cash flow after deducting share-based compensation is already at 10 percent over the last four quarters.
Uber reported revenue growth of 20.6 percent in its most recent quarter. Gross bookings increased by 16 percent. The company has further increased the take rate, which is now 27 percent (previously 26 percent). The improvement in profitability is particularly notable. Because EBITDA increased by 55 percent. Since gross bookings are now only in the range of 16 to 20 percent, it can be said that Uber is no longer in hypergrowth.
Nevertheless, there are numerous areas of growth at an international level, through advertising, in the areas of freight, food or even in rural areas. The focus now is on margin expansion and cash flow growth. The improvement in these two metrics alone should significantly boost the share price in the long term. Uber is now also ready to buy back its first shares.
Record: Plus 70 percent of Uber One memberships
Not only was Uber able to further expand the number of trips, the number of Uber One users, which reflects the particularly loyal customer base, has also grown. Uber One now has over 25 million members. This represents growth of 70 percent compared to the previous year. Membership with numerous advantages for Uber Eats and also for rides is possible with a monthly fee of just $9.99.
The cross-selling potential is far from exhausted. Most recently the partnership was with Turo announced. This allows Uber users in several countries around the world to choose and rent between 1,600 Turo vehicle models directly via the app.
Rumors of an Expedia takeover have not been confirmed
Recently there were also rumors that Uber was interested in taking over Expedia. CEO Dara Khosrowshahi previously worked for Expedia and there are numerous synergies that would lead to margin improvement. With hotel and travel services, Uber would push further towards becoming a lifestyle super app. But as of today, these takeovers are only rumors and have already been refuted by Expedia Chairman Barry Diller.
The threat of robo-taxis is currently hot air
Robotaxis are repeatedly seen as a threat to Uber. But Uber has formed additional partnerships with industry leaders for autonomous vehicles. The best-known partners today include BYD, Waymo, WeRide and Cruise. Uber is positioning itself as an ideal partner for developers of autonomous vehicle hardware and software. Uber helps introduce and scale their technology globally. CEO Khosrowshahi hints at further partnerships in 2025.
Uber: more opportunities than risks
Uber is a powerful platform company with clear market leadership. Uber can continue to grow through network effects, expansion and cross-selling for a long time. Management has done everything right so far to expand the company’s competitive advantage. Nevertheless, Uber remains a technology company that could always be affected by possible disruptions. Anyone who invests in technology must therefore constantly keep an eye on the market environment.
Disclaimer:
Not investment advice. No call to buy or sell securities.