Ride sharing and on demand delivery service Uber (NYSE: UBER) reported results ahead of analyst expectations in the Q4 FY2022 quarter, with revenue up 49% year on year to $8.61 billion. Uber made a GAAP profit of $595 million, down on its profit of $879 million, in the same quarter last year.
Uber (UBER) Q4 FY2022 Highlights:
- Revenue: $8.61 billion vs analyst estimates of $8.51 billion (1.18% beat)
- EPS: $0.29 vs analyst estimates of -$0.16 ($0.45 beat)
- Free cash flow was negative $303 million, down from positive free cash flow of $358 million in previous quarter
- Gross Margin (GAAP): 38.3%, up from 36.8% same quarter last year
- Monthly Active Platform Consumers: 131 million, up 13 million year on year
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.
Uber pioneered the online ride hailing model, allowing users to summon taxi’s via their mobile devices, an innovation that disrupted modern transportation. The company next expanded into food delivery with UberEats, and has grown a trucking brokerage business, Uber Freight. It is the largest global ride sharing network, with majority market share in the most countries it operates in.
The company’s value propositions are multiple. For individuals, Uber effectively lowered the cost per mile for taxi transportation vs. legacy cabs, while providing ease of use and convenience. For drivers, it has provided flexible earning opportunities. While for restaurants and merchants, Uber’s platform has allowed them to expand their consumer reach, and provided an online presence.
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.
Uber competes with rival Lyft (NASDAQ: LYFT) in ride hailing and DoorDash (NYSE:DASH), Just Eat Takeaway (ENXTAM:TKWY), Delivery Hero (XTRA: DHER), and Deliveroo (LSE:ROO).
Sales Growth
Uber's revenue growth over the last three years has been impressive, averaging 46.6% annually.

This quarter, Uber reported a very impressive 49% year on year revenue growth, roughly in line with what analysts expected.
Usage Growth
As a gig economy marketplace, Uber generates revenue growth by a combination of the volume of services users order and how much commission it earns.
Over the last two years the number of Uber's paying users, a key usage metric for the company, grew 25.9% annually to 131 million users. This is a fast growth for a consumer internet company.

In Q4 the company added 13 million paying users, translating to a 11% growth year on year.
Revenue Per User
Average revenue per user (ARPU) is a critical metric to track for every consumer internet product and for Uber it measures how much it earns off each transaction on its platform, a measure of the pricing leverage Uber has with both its users and providers of services.
Uber’s ARPU growth has been very strong over the last two years, averaging 41.9%. The ability to increase price while still growing its user base at this rate reflects the strength of Uber’s platform, as its users are spending significantly more than last year. This quarter, ARPU grew 34.2% year on year, reaching $65.70 for each of the paying users.
User Acquisition Efficiency
Consumer internet businesses like Uber grow by a combination of product virality, paid advertisement and occasional incentives, unlike enterprise products that are typically sold by sales teams.
It is relatively expensive for Uber to acquire new users, with the company spending 47% of its gross profit on marketing over the last year. This level of sales and marketing spend efficiency indicates Uber has to compete for users and points to Uber likely having to continue to invest to maintain growth.
Earnings & Free Cash Flow
Investors typically look at a company’s operating income to get a sense of how profitable a core business is. Adjusted EBITDA is the most common profitability metric for consumer internet companies, similar to operating profit, but removes various one time or non-cash expenses to give a more normalized measure of profitability.
Uber reported EBITDA of $665 million this quarter, which was a 7.73% margin. Over the last twelve months Uber has shown a solid, above-average profitability for a consumer internet business with average EBITDA margins of 5.22%.

If you follow StockStory for a while, you know that we put an emphasis on cash flow. Why, you ask? We believe that in the end cash is king, as you can't use accounting profits to pay the bills. Uber burned through $303 million in Q4, increasing the cash burn by 62% year on year.

Uber has generated $390 million in free cash flow over the last twelve months, a 1.22% of revenues. This FCF margin is a result of Uber asset lite business model, and provides it with the optionality to further invest in the business.
Key Takeaways from Uber's Q4 Results
With a market capitalization of $69.6 billion, more than $4.31 billion in cash and with free cash flow over the last twelve months being positive, the company is in a very strong position to invest in growth.
We were impressed by the exceptional revenue growth Uber delivered this quarter. And we were also glad to see the user growth. Overall, we think this was a really good quarter, that should leave shareholders feeling very positive. The company is up 8.32% in the premarket and currently trades at $37.88 per share.
Is Now The Time?
When considering Uber, investors should take into account its valuation and business qualities, as well as what happened in the latest quarter. We think Uber is a good business. We would expect growth rates to moderate from here, but its revenue growth has been exceptional, over the last three years. And while its sales and marketing efficiency is sub-average, the good news is its user growth has been strong, and its top-tier ARPU growth shows increasing value of its platform to its users.
At the moment Uber trades at next twelve months EV/EBITDA 21.8x. There is definitely a lot of things to like about Uber and looking at the consumer internet landscape right now, it seems that the company trades at a pretty interesting price point.
The Wall St analysts covering the company had a one year price target of $45.9 per share right before these results, implying that they saw upside in buying Uber even in the short term.
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