Ride sharing and on demand delivery service Uber (NYSE: UBER) reported Q4 FY2023 results beating Wall Street analysts' expectations, with revenue up 15.4% year on year to $9.94 billion. It made a GAAP profit of $0.66 per share, improving from its profit of $0.29 per share in the same quarter last year.
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Uber (UBER) Q4 FY2023 Highlights:
- Revenue: $9.94 billion vs analyst estimates of $9.76 billion (1.8% beat)
- EPS: $0.66 vs analyst estimates of $0.17 (293% beat)
- Free Cash Flow of $768 million, down 15.1% from the previous quarter
- Gross Margin (GAAP): 39%, up from 31.3% in the same quarter last year
- Monthly Active Platform Consumers: 150 million, up 19 million year on year
- Powered nearly 26 million Daily Trips in 2023 and made its first full-year GAAP profit
- Market Capitalization: $145 billion
Born out of a winter night thought: "What if you could request a ride from your phone?" Uber (NYSE: UBER) operates a global network of on demand services, most prominently ride hailing and food delivery, and freight.
Gig Economy
The iPhone changed the world, ushering in the era of the “always-on” internet and “on-demand” services - anything someone could want is just a few taps away. Likewise, the gig economy sprang up in a similar fashion, with a proliferation of tech-enabled freelance labor marketplaces, which work hand and hand with many on demand services. Individuals can now work on demand too. What began with tech enabled platforms that aggregated riders and drivers has expanded over the past decade to include food delivery, groceries, and now even a plumber or graphic designer are all just a few taps away.
Sales Growth
Uber's revenue growth over the last three years has been exceptional, averaging 56.8% annually. This quarter, Uber beat analysts' estimates and reported 15.4% year-on-year revenue growth.
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Usage Growth
As a gig economy marketplace, Uber generates revenue growth by expanding the number of services on its platform (e.g. rides, deliveries, freelance jobs) and raising the commission fee from each service provided.
Over the last two years, Uber's users, a key performance metric for the company, grew 13.9% annually to 150 million. This is solid growth for a consumer internet company.
In Q4, Uber added 19 million users, translating into 14.5% year-on-year growth.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track for consumer internet businesses like Uber because it measures how much the company earns in transaction fees from each user. This number also informs us about Uber's take rate, which represents its pricing leverage over the ecosystem, or "cut" from each transaction. 
Uber's ARPU growth has been exceptional over the last two years, averaging 35.1%. The company's ability to increase prices while growing its users demonstrates its platform's value, as its users are spending significantly more than last year. This quarter, ARPU grew 0.8% year on year to $66.24 per user.
Key Takeaways from Uber's Q4 Results
It was great to see Uber's strong user growth this quarter. We were also happy its revenue, EBITDA, and EPS outperformed Wall Street's estimates. This was driven by not only user growth but also better-than-expected gross bookings in both its mobility ($19.3 billion vs estimates of $19.1 billion) and delivery ($17.0 billion vs estimates of $16.7 billion) segments. 2023 was a milestone year for the company as it finally turned a profit and powered nearly 26 million daily trips. Looking ahead, Uber's gross bookings and EBITDA guidance also beat analysts' forecasts. Zooming out, we think this was a decent quarter, showing that the company is staying on track. The stock is up 1.2% after reporting and currently trades at $71.3 per share.
So should you invest in Uber right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.
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