How Uber Makes Money

The Mobility segment generates the majority of profits

Fact checked by Yarilet PerezReviewed by Somer Anderson

Uber Technologies Inc. (UBER) operates a digital platform that leverages the company’s large 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 (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 and profits is its Mobility business.
• Uber announced its inaugural share repurchase program of $7 billion in February 2024.
• The company brought on a new CFO in November 2023: Prashanth Mahendra-Rajah

Uber’s Financials

Uber announced in February 2024 the financial results for its 2023 fiscal year (FY) for the period ended Dec. 31, 2023. The company posted a net income of $1.89 billion, a significant improvement from the net loss of $9.14 billion reported in 2022. Revenue grew by 16.95% year-over-year (YOY) to $37.28 billion.

Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), which the company uses as a profitability metric for its business segments, was $4.05 billion; an increase of 136.54% from 2022.

The company’s performance improved dramatically due to a variety of factors, including larger and more engaged audiences, significant growth in Latin America and Asia Pacific in regards to mobility.; as well as from overall growth in the delivery segment.

Uber’s Business Segments

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

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 $2.35 billion.

Mobility

Uber’s Mobility segment connects users with many different transportation vehicles, including ridesharing, carsharing, micromobility, rentals, public transit, taxis, and more.

The Mobility segment generated revenue of $19.83 billion in 2023, an increase of 41% from the previous year. It accounted for 53.20% of Uber’s total revenue for the year. The segment posted adjusted EBITDA of $4.96 billion, an increase of 50% YOY. Given that the Corporate G&A and Platform R&D EBITDA loss was significant, Mobility EBITDA was greater than 100% of the final EBITDA number for all business segments. If Corporate G&A and Platform R&D EBITDA is taken out of the calculation, then Mobility accounted for 76.72% of EBITDA.

Delivery

Uber’s Delivery segment provides a platform for consumers to search for food and local commerce, including restaurants, groceries, alcohol, convenience store items, and other select goods.

Revenue for the Delivery segment grew by 12% YOY to $12.20 billion in 2023. The segment accounted for nearly 32.74% of the company’s total revenue in the year. It posted adjusted EBITDA of $1.51 billion; an increase of 173% from 2022. As noted above, the Corporate G&A and Platform R&D EBITDA was a large loss, taking away from total segment EBITDA, whereby Mobility EBITDA was more than 100% of total EBITDA. If Corporate G&A and Platform R&D EBITDA is taken out of the calculation, then Delivery accounted for 23.28% of EBITDA

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 segment generated $5.25 billion in revenue in 2023, down 24% from 2022. It accounted for almost 14.07% of companywide revenue. The segment’s adjusted EBITDA loss was $64 million. A number for 2022 was not provided.

Uber’s Recent Developments

In February 2024, Uber announced its $7 billion share repurchase program. It is making this move after it witnessed a strong rebound in its ride-share services and strong demand for its delivery business. This type of move is seen as confidence in the company and operationally it returns capital back to shareholders.

Uber announced in September 2023 that Prashanth Mahendra-Rajah will join the company as the new chief financial officer (CFO). Mahendra-Rajah joined from Analog Devices, where he was also CFO. He joined the company in November 2023.

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 its diversity by race, gender, ability, veteran status, and LGBTQ+ identity.

Can I Pay Uber With Cash?

Yes, you can pay Uber with cash. To do so, in the app, go to the payment options and select cash as the payment option. You can then directly pay your driver in cash.

What Percentage Does Uber Take?

The percentage of sales that Uber takes from its drivers varies on different factors as well as location. It is estimated that Uber’s global take is about 29%.

Who Is Uber’s Biggest Competitor?

Uber has many competitors in its different businesses, including Lyft, Via, Bolt, DoorDash, Deliveroo, and Amazon.

The Bottom Line

Uber hailed in the ride-sharing business when it launched, transforming the taxi industry and how people get around. It also inspired many similar types of businesses. The company has expanded its offering since its early days, providing more than just mobility services. Its Delivery and Freight businesses also bring in significant amounts of revenue.

Read the original article on Investopedia.