Travel helps Uber drive to another profitable quarter

Uber reported its second consecutive profitable quarter Tuesday morning, boosted by a 21% increase in gross bookings year over year and revenue growth of 11% to $9.3 billion in the third quarter.

“Our relentless focus on improving the product experience for both consumers and drivers continued to power profitable growth, with trip growth accelerating to 25%,” CEO Dara Khosrowshahi said. “Uber’s core business is stronger than ever as we enter the busiest period of the year.”

Uber reported net income of $221 million for the quarter that ended in September. That figure includes a $96 million headwind related to revaluations of Uber’s equity investments. Over the same quarter last year, the company lost $1.2 billion.

Surging global travel demand played a part in Uber's strong quarter, Khosrowshahi said during a call with analysts Tuesday morning.

"We had a very, very strong summer, augmented by travel," he said. "As you know, travel has been absolutely booming, leisure travel, and Uber has a very high penetration of calls from travel consumers."

Khosrowshahi, a former CEO of Expedia Group, speaks optimistically about Uber Travel features, including the company's growing presence in the United Kingdom, where — besides hailing a ride — travelers can book rail and coach tickets and even ferry rides on the Thames. In May, Uber added flight booking to its options in the U.K.

He cited figures showing 60% of train and coach users and 25% of flight users in the U.K. have become repeat users of the service. "So they try the product because we have a big audience," he said, "but more importantly they’re coming back to the product, which is great."

Khosrowshahi didn't offer a timeline for when users in other parts of the world could expect expanded Uber Travel features but made clear the importance of travel in Uber's plans.

"For me, travel is something that’s very much in my heart because of my old Expedia days," he said. "We talked about travel being a very, very strong signal for Uber, with travelers typically using Uber because of our global footprint.

"Kind of perspective here: In 2022, nearly 700 million trips globally were taken by consumers out of their primary city, which is pretty amazing. Every quarter, about 20% of our users took a domestic trip outside of their primary city. Our users, they’re high-income earners, they tend to travel a lot, and that becomes a good segment for us to target."

Another travel-related opportunity for Uber is in building ridership to and from airports for Uber Reserve, a service that allows pre-booking up to 90 days in advance. Khosrowshahi said Uber typically accounts for one of the four legs in a roundtrip airport journey. While Reserve is good at picking up riders at their home or hotel for the drive to the airport, he said, "We can do a lot more to improve the experience for the rider arriving at the airport.”

Even with room to grow in that regard, Uber saw its total number of trips increase 25% in Q3 to reach 2.4 billion. Gross bookings for mobility increased 31% year over year, while deliveries were up 18% from last year. Bookings for Uber's freight business were down 27% compared to Q3 2022.

Adjusted EBITDA came in at $1.1 billion, up $576 million compared to the same quarter of 2022. Sales and marketing costs were $941 million for the quarter, down from $1.15 billion year over year.

“Strong top-line trends and record profitability demonstrate the durability of our growth and the significant earnings power underlying our platform,” chief financial officer Nelson Chai said. “We continue to make disciplined investments in growth opportunities to support long-term value creation for all stakeholders.”

This year’s second quarter marked Uber’s first-ever quarterly net profit, with earnings of $9.2 billion driving a net profit of $394 million.

“For most of our history, ‘profitable’ wasn’t the first thing that came up when you asked someone about Uber,” Khosrowshahi said at the time. “In fact, many observers proclaimed over the years that we would never make any money. … But we knew they were wrong about Uber, as did many of our investors who backed us over the years.”