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How Uber Makes Money

The Mobility segment generates the majority of profits

Uber Technologies Inc. (UBER) operates a digital platform that leverages the company's massive network and technology to transport people and goods from one point to another. It provides ride-hailing services through its mobility business, food, grocery, and other delivery services through its delivery business, and freight shipping services through its freight business. Uber's platform works to connect people and businesses needing these services with individuals and businesses that provide them.

Uber operates in the highly-competitive mobility and delivery industries globally as well as in the logistics industry in the U.S. and Canada. In the mobility industry, the company faces competition from Lyft Inc. (LYFT) and China-based Didi Global Inc. (DIDI). Uber also competes with companies offering delivery services, including DoorDash Inc. (DASH) and Amazon.com Inc. (AMZN). Its freight business competes with freight brokers like C.H. Robinson Worldwide Inc. (CHRW) and XPO Logistics Inc. (XPO).

Key Takeaways

  • Uber Technologies matches consumers looking for rides, food delivery, or shipping with people selling those services.
  • Uber’s largest source of revenue is its delivery business, but its rides business generates the most profit.
  • Uber's freight business experienced rapid growth in Q4 FY 2021.
  • Uber is implementing a fuel surcharge starting on March 16, 2022, in order to compensate its drivers and couriers for the cost of rising fuel prices.
  • Uber reached an agreement with Canada's largest services-sector union to provide employee-like benefits to ride-hail and food-delivery contractors.

Uber’s Financials

Uber announced in early February financial results for Q4 of its 2021 fiscal year (FY), the three-month period ended Dec. 31, 2021. The company posted net income of $892 million, a significant improvement from the net loss of $968 million reported in the year-ago quarter. Revenue grew 82.6% year over year (YOY) to $5.8 billion. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which the company uses as a profitability metric for its individual business segments, was $86 million compared to -$454 million in the year-ago quarter.

Uber's ride-hailing business suffered with the onset of the COVID-19 pandemic in early 2020. But its delivery business thrived as people sheltering at home increased their demand for food delivery. That success helped to offset some of the losses in the rides business, which has begun to recover amid vaccine rollouts and the reopening of the economy.

Uber said in its earnings press release for Q4 FY 2021 that more consumers were active on its platform than ever before and that its delivery business attained adjusted EBITDA profitability. It also said that gross bookings in its ride-hailing business had nearly recovered to pre-pandemic levels.

Uber’s Business Segments

Uber has three operating and reportable segments: 1) Mobility, comprised of its ride-hailing business, formerly known as Rides; 2) Delivery, its food, grocery, and other small item delivery service, formerly known as Eats; and 3) Freight, its freight shipping business. Uber provides a breakdown of revenue and adjusted EBITDA for each of these three segments.

Uber also reports results for an "All Other" category, which is now mostly comprised of revenue from its New Mobility offerings and products, such as providing access to rides through dockless e-bikes and e-scooters. This category did not generate any revenue or adjusted EBITDA in Q4 FY 2021. The company also reports certain costs not attributable to its reportable segments under a "Corporate G&A and Platform R&D" category, which posted an adjusted EBITDA loss of $489 million.

Results from these two other categories and any negative amounts in the reportable segments were excluded from the percentage calculations in the pie charts above and in the segment profiles below.

Mobility (formerly Rides)

Uber’s Mobility segment is its flagship ride-hailing business. It connects consumers with drivers who provide rides using a range of different types of vehicles, including cars, auto rickshaws, motorbikes, minibuses, or taxis. The segment also includes activities related to Uber's financial partnerships and transit offerings.

The Mobility segment generated revenue of $2.3 billion in Q4 FY 2021, up 54.9% compared to the year-ago quarter. It accounted for more than 39% of Uber's total revenue for the quarter. The segment posted adjusted EBITDA of $575 million, an increase of 96.2% YOY. It comprised nearly 96% of the adjusted EBITDA across all reportable segments.

Delivery (formerly Eats)

Uber's Delivery segment provides a platform for consumers to search for food and discover local restaurants, order meals, and either pick-up the meal at the restaurant or have it delivered. In some regions, the service also offers delivery for groceries, alcohol, convenience store items, and other select goods.

Revenue for the Delivery segment grew 78.5% YOY to $2.4 billion in Q4 FY 2021. The segment accounted for nearly 42% of the company's total revenue in the quarter. It posted adjusted EBITDA of $25 million, a significant improvement from the adjusted EBITDA loss of $145 million in the year-ago quarter. The segment accounted for more than 4% of adjusted EBITDA across all of Uber's reportable segments.

Freight

Uber's Freight segment provides a platform that connects carriers with shippers. It offers carriers upfront and transparent pricing as well as the ability to book a shipment. The segment also includes transportation management and other logistics services.

The Freight segmented generated $1.1 billion in revenue in Q4 FY 2021, up 245.0% compared to the year-ago quarter. It accounted for almost 19% of companywide revenue. The segment's adjusted EBITDA loss narrowed to $25 million in Q4 FY 2021 from $41 million in the year-ago quarter.

Recent Developments

On March 12, 2022, Uber announced that it would begin implementing a temporary fuel surcharge starting on March 16 as a way to compensate its drivers and couriers for rising fuel prices. In the U.S., the surcharge for an Uber trip will be either $0.45 or $0.55 and $0.35 or $0.45 for an Uber Eats order, depending on location. The entire surcharge will go directly to the company's workers. The company said the surcharge was temporary for at least 60 days, after which it would conduct a reassessment.

On Jan. 27, 2022, Uber said that it had reached an agreement with the largest services-sector union in Canada, the United Food and Commercial Workers Canada (UFCW) union. Uber agreed to provide employee-like benefits to contractors who work as ride-hail and food delivery drivers, such as pensions, sick pay, and other workers' rights.

In 2021, Uber reached a similar deal with Britain's GMB union, which gave GMB the power to represent as many as 70,000 drivers. Uber has fought with labour unions throughout the world for years over whether its drivers should be reclassified as regular employees rather than as contractors.

How Uber Reports Diversity and Inclusiveness

As part of our effort to improve the awareness of the importance of diversity in companies, we offer investors a glimpse into the transparency of Uber and its commitment to diversity, inclusiveness, and social responsibility. We examined the data Uber releases to show you how it reports the diversity of its board and workforce to help readers make educated purchasing and investing decisions.

Below is a table of potential diversity measurements. It shows whether Uber discloses its data about the diversity of its board of directors, C-Suite, general management, and employees overall, as is marked with a ✔. It also shows whether Uber breaks down those reports to reveal the diversity of itself by race, gender, ability, veteran status, and LGBTQ+ identity.

Uber Diversity & Inclusiveness Reporting
  Race Gender Ability Veteran Status Sexual Orientation
Board of Directors          
C-Suite          
General Management ✔ (U.S. Only)      
Employees ✔ (U.S. Only)      

Article Sources

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  1. Uber Technologies Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 4.

  2. Uber Technologies Inc. "Form 10-K for the fiscal year ended December 31, 2021," Pages 5-6.

  3. Uber Technologies Inc. "Form 8-K dated Feb. 9, 2022," Page 10.

  4. Uber Technologies Inc. "Form 8-K dated Feb. 9, 2022," Page 3.

  5. The Wall Street Journal. "For Uber, Coronavirus Pandemic Is Still Weighing on Rides Business."

  6. The Wall Street Journal. "Uber Reaches Income Milestone as Rides Recover, Delivery Grows."

  7. Uber Technologies Inc. "Uber Announces Results for Fourth Quarter and Full Year 2021."

  8. Uber Technologies Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 96.

  9. Uber Technologies Inc. "Form 10-K for the fiscal year ended December 31, 2021," Page 125.

  10. Uber Technologies Inc. "New fuel surcharge to help drivers and couriers."

  11. Reuters. "Uber, Canadian union reach deal to support gig worker benefits, flexibility."

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