Uber (UBER)

Ride sharing and on-demand delivery platform Uber (NYSE:UBER) announced better-than-expected revenue in Q3 CY2025, with sales up 20.4% year on year to $13.47 billion. Its GAAP profit of $3.11 per share was significantly above analysts’ consensus estimates.

Company Overview

Notoriously funded with $7.7 billion from the Softbank Vision Fund, Uber (NYSE:UBER) operates a platform of on-demand services such as ride-hailing, food delivery, and freight.

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.

A company’s long-term sales performance can indicate its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Uber’s 19.5% annualized revenue growth over the last three years was impressive. Its growth surpassed the average consumer internet company and shows its offerings resonate with customers, a great starting point for our analysis.

This quarter, Uber reported robust year-on-year revenue growth of 20.4%, and its $13.47 billion of revenue topped Wall Street estimates by 1.5%.

Looking ahead, sell-side analysts expect revenue to grow 16.5% over the next 12 months, a deceleration versus the last three years. We still think its growth trajectory is attractive given its scale and suggests the market sees success for its products and services.

User 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 monthly active platform consumers, a key performance metric for the company, increased by 14.7% annually to 189 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction.

In Q3, Uber added 28 million monthly active platform consumers, leading to 17.4% year-on-year growth. The quarterly print was higher than its two-year result, suggesting its new initiatives are accelerating user growth.

Revenue Per User

Average revenue per user (ARPU) is a critical metric to track 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 subpar over the last two years, averaging 2.4%. This isn’t great, but the increase in monthly active platform consumers is more relevant for assessing long-term business potential. We’ll monitor the situation closely; if Uber tries boosting ARPU by taking a more aggressive approach to monetization, it’s unclear whether users can continue growing at the current pace.

This quarter, Uber’s ARPU clocked in at $71.25. It grew by 2.5% year on year, slower than its user growth.

For gig economy businesses like Uber, gross profit tells us how much money the company gets to keep after covering the base cost of its products and services, which typically include server hosting, customer support, and payment processing fees. Another cost of revenue could also be insurance to protect against liabilities arising from providing transportation, housing, or freelance work services.

Uber’s unit economics are far below other consumer internet companies, signaling it operates in a competitive market and must pay many third parties a slice of its sales to distribute its products and services. As you can see below, it averaged a 34.3% gross margin over the last two years. Said differently, Uber had to pay a chunky $65.71 to its service providers for every $100 in revenue.

Uber’s gross profit margin came in at 39.8% this quarter, marking a 6.4 percentage point increase from 33.4% in the same quarter last year. Uber’s full-year margin has also been trending up over the past 12 months, increasing by 2.9 percentage points. If this move continues, it could suggest better unit economics due to more leverage from its growing sales on the fixed portion of its cost of goods sold (such as servers).

Unlike enterprise software that’s typically sold by dedicated sales teams, consumer internet businesses like Uber grow from a combination of product virality, paid advertisement, and incentives.

Uber is quite efficient at acquiring new users, spending only 27.1% of its gross profit on sales and marketing expenses over the last year. This efficiency indicates that Uber has a highly differentiated product offering, giving it the freedom to invest its resources into new growth initiatives.

EBITDA is a good way of judging operating profitability for consumer internet companies because it excludes various one-time or non-cash expenses (depreciation), providing a more standardized view of the business’s profit potential.

Uber has been an efficient company over the last two years. It was one of the more profitable businesses in the consumer internet sector, boasting an average EBITDA margin of 15.3%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Analyzing the trend in its profitability, Uber’s EBITDA margin rose by 12.4 percentage points over the last few years, as its sales growth gave it operating leverage.

In Q3, Uber generated an EBITDA margin profit margin of 16.8%, up 1.6 percentage points year on year. Since its gross margin expanded more than its EBITDA margin, we can infer that leverage on its cost of sales was the primary driver behind the recently higher efficiency.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

In Q3, Uber reported EPS of $3.11, up from $1.21 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Uber’s full-year EPS of $7.79 to shrink by 55.9%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Uber has shown robust cash profitability, driven by its cost-effective customer acquisition strategy that enables it to invest in new products and services rather than sales and marketing. The company’s free cash flow margin averaged 16% over the last two years, quite impressive for a consumer internet business.

Taking a step back, we can see that Uber’s margin expanded by 15.7 percentage points over the last few years. This is encouraging, and we can see it became a less capital-intensive business because its free cash flow profitability rose more than its operating profitability.

Uber’s free cash flow clocked in at $2.23 billion in Q3, equivalent to a 16.6% margin. The company’s cash profitability regressed as it was 2.3 percentage points lower than in the same quarter last year, but we wouldn’t put too much weight on the short term because investment needs can be seasonal, causing temporary swings. Long-term trends carry greater meaning.

Uber reported $9.56 billion of cash and $12.19 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $8.09 billion of EBITDA over the last 12 months, we view Uber’s 0.3× net-debt-to-EBITDA ratio as safe. We also see its $211.1 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

It was great to see Uber increase its number of users this quarter. We were also happy its number of monthly active platform consumers outperformed Wall Street’s estimates. On the other hand, its EBITDA slightly missed. Overall, this print was mixed. Investors were likely hoping for more, and shares traded down 4.3% to $95.50 immediately after reporting.

Updated: December 4, 2025 at 9:17 PM EST

Before investing in or passing on Uber, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

There are definitely a lot of things to like about Uber. First off, its revenue growth was impressive over the last three years. And while its projected EPS for the next year is lacking, its rising cash profitability gives it more optionality. On top of that, its EPS growth over the last three years has been fantastic.

Uber’s EV/EBITDA ratio based on the next 12 months is 18.6x. This valuation tells us that a lot of optimism is priced in. Uber is a good one to add to your watchlist - there are companies featuring superior fundamentals at the moment.

Wall Street analysts have a consensus one-year price target of $111.86 on the company (compared to the current share price of $90.98).