Uber has achieved its first annual operating profit since its initial public offering (IPO) in 2019, signalling a departure from its historical pursuit of growth at the expense of profitability.
The San Francisco-based ride-hailing company reported a profit of $1.8 million for the full year of 2023, with the fourth quarter contributing significantly to this success.
In Q4 2023, Uber’s profit reached $1.43 million, demonstrating a remarkable 140% year-over-year increase according to its financial statement released recently.
This financial milestone is a noteworthy turnaround for Uber, which, in its early years, symbolized the archetype of a money-losing enterprise heavily reliant on venture capital.
The company faced challenges following its IPO, including regulatory conflicts and labour issues. Uber spent over $200 million supporting California’s Prop 22 ballot initiative, which aimed to keep gig workers classified as independent contractors, exempt from minimum wage requirements and benefits.
The company had emphasized the potential investment risk associated with classifying drivers as employees in its IPO filing.
However, in response to mounting pressure from investors seeking a viable path to profitability, Uber implemented a strategic shift.
The company embarked on a cost-cutting journey, including significant layoffs, and strategically acquired companies such as Postmates in 2020.
This acquisition spree aimed to rapidly bolster Uber’s delivery unit alongside its core ride-hailing business.
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Uber’s CEO, Dara Khosrowshahi, characterized 2023 as an “inflexion point,” emphasising the company’s ability to generate robust and profitable growth at scale.
The focus on profitability is a substantial departure from Uber’s historical strategy of prioritizing market share and expansion over immediate financial returns.
While labor-related challenges persist for Uber and the broader gig economy, the company has responded to the changing landscape.
Minimum wage regulations for gig drivers in cities like Seattle prompted Uber and its counterparts to implement restrictions on driving hours.
Striking a balance between addressing labour concerns and avoiding increased costs that could impact service usage is a complex challenge for gig-economy firms.
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The San Francisco-based company, saw its gross bookings rise 22% year-over-year growth, reaching $37.6 billion.
Also, the Mobility segment contributed significantly, with the delivery segment reaching $17.0 billion, marking a robust 19% year-over-year growth.
- Uber reported a 15% year-over-year increase in revenue, totalling $9.9 billion, or 13% on a constant currency basis.
- The combined revenue from Mobility and Delivery surged by 22% year-over-year, reaching $8.7 billion, emphasizing the company’s ability to monetize its diverse platform offerings.
- Income from operations saw an impressive turnaround, reaching $652 million, up $794 million year-over-year and $258 million quarter-over-quarter.
- Net income attributable to Uber Technologies, Inc. reached $1.4 billion, including a $1.0 billion net tailwind primarily due to net unrealized gains related to the revaluation of Uber’s equity investments.
- Adjusted EBITDA surged to $1.3 billion, marking a substantial year-over-year increase of $618 million, with an adjusted EBITDA margin of 3.4%, up from 2.2% in Q4 2022.
Net cash provided by operating activities reached $823 million, and free cash flow, defined as net cash flows from operating activities less capital expenditures, amounted to $768 million.
